First, it is important to understand that national housing starts in 2023 are not high relative to Canada’s population. In 1976, our population was about 23 million with housing starts of 273,000. In 2023 our population is 40 million with starts of 240,000. Relative to the populations, that’s a 41 per cent difference in new housing. This explains the lack of supply and today’s high prices.
Economists say there is one housing start for every 4.2 people entering the working-age population. The historical average is 1.8. To meet demand and reduce housing inflation, Canada would need to double its housing construction capacity, which would be more appropriate for today’s population.
British Columbia’s Premier David Eby is planning to build homes for the middle-class. He said, “building public housing on public land for middle-class families was never something government needed to do when I was growing up — generally, the private sector looked after it.”
The private sector could still look after it if the government would get out of the way. The myth promoted by politicians that the private sector has failed to provide housing supply and affordability ignores government’s growing involvement in housing, since the 1970s, including more fees and regulations. In the 1970s, when housing was easier to build, there was no GST/HST, and other fees, taxes and regulations applied by three levels of government.
Government already controls housing and has choked supply. Municipalities, provincial and federal governments tell builders where and what to build (zoning); when to build (permit approvals); how to build (building code); and how much revenue they require from the project (GST/HST, Land Transfer Tax, Development Cost Charges, Community Amenity Contributions, permit fees, etc.)
Federal and provincial governments are also venturing into the home design business claiming it will result in faster permit approvals. This is nonsense.
For example, a local municipality in my region, with the largest workload, processes basic building permits in a few days. The same permits take months in other municipalities, with less workloads, due to obstructive municipal cultures – not home design issues.
Government should stay out of the design business and let private designers do their jobs. Instead, provinces need to focus on fixing obstructive municipal processes and outdated zoning.
In an attempt to do that, B.C. and other jurisdictions are establishing housing targets in some municipalities, as well as launching legislation to allow small multi-family projects in single family zones.
Unfortunately, B.C. also expanded the use of DCCs to include fire and police stations, solid waste facilities and highways, in addition to the existing costs for sewer and water, sidewalks and parks.
They also legalized Community Amenity Contributions which includes fees for recreation centres, public art, cash in-lieu, etc.
When this is added to the spiraling costs of materials and labour, how do they expect affordable housing to be built, even with improved density?
Victoria’s regional government (Capital Regional District) is planning to finance a $2 billion water supply system by adding Development Cost Charges up to 78 per cent on all new housing. Single family and townhome starts are already in decline and this will only add to the problem.
B.C.’s Ministry of Municipal Affairs may refuse to approve the DCCs if they “are excessive, deter development or discourage construction of reasonably priced housing.”
We have sent letters of objection in the past, but I have never seen the ministry refuse a DCC bylaw even when the increase is 100 per cent or more.
As for governments building homes for the middle-class, there is no reason to believe this is a solution to Canada’s high housing prices created by their policies.
This initiative will cost taxpayers billions of dollars and have a negligible impact on the market. A study by economist Evan Mast revealed the housing market is a migration chain where more supply by the private sector, at all price points, creates more housing for low-income earners.
Government hasn’t the resources nor the ability to have any real impact on supply by building homes. Instead, they should cap new fees and regulations, get out of the way, and let the private sector fix the housing debacle created by government.
Billions of taxpayers’ dollars could be saved and allocated to health care – another crisis government should take responsibility for and fix.
Casey Edge is executive director of the Victoria Residential Builders Association.
Leave a Reply