Image of the day: housing starts by province

Ontario's not building enough, and it's getting worse

B.C. a relative leader in housing starts when compared with population growth, experts say. Frances Bula, Globe and Mail, August 16. Includes an interactive version of the above graphs.

Housing starts in Ontario are down, because costs are too high. There’s a video by Andrew Chang which talks about Ontario condo projects in particular: higher interest rates have driven down the market price of condos, and at the same time, Ontario municipalities like Toronto have been raising their development charges on new housing. The Doug Ford government initially required those increases to be phased in over five years, which would have helped - but reversed themselves 18 months later, basically slamming the brakes on development.

Even when something's legal to build, if costs are too high, it won't get built. It doesn't make sense to build something that's going to be worth less, after subtracting total construction costs, than what's already there.

There appears to have been less impact on purpose-built rental projects. In Nova Scotia, which mostly builds rentals instead of condos, and which doesn't tax new housing like a gold mine the way Ontario does, housing starts are booming. The federal government provides low-cost long-term loans for new purpose-built rentals, it waived GST/HST on new rentals starting a year ago, and more recently it's allowing accelerated depreciation on new rentals (offsetting taxable income). All of these help to reduce costs and make more projects make sense, countering the headwinds that come from higher costs for labour and materials.

My impression is that housing starts are BC is holding up reasonably well, although municipalities jacking up development charges on new housing is a concern here as well.