Addressing Ontario's Housing Crisis: A Call for Comprehensive Reform

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Governments are recognizing the economic implications of housing affordability in Ontario, yet significant challenges remain. This article outlines the current state of the housing crisis, the need for reform, and proposed solutions to improve affordability and supply.

For years, the housing crisis in Ontario has been seen as an unfortunate byproduct of economic growth rather than a critical economic challenge that needs urgent attention. However, there has been a noticeable shift in perspective among governments, recognizing that housing affordability is not merely a social issue, but a fundamental economic concern. As a result, various reforms have been introduced, taxes have been reduced, and regulatory barriers are now under scrutiny. Although progress is evident, it is essential to acknowledge that this progress does not equate to success. Despite some advancements, Canada, particularly Ontario, remains significantly distant from effectively addressing its housing crisis.
Housing is a cornerstone of economic prosperity and human well-being, ranking alongside food and security as a basic human necessity. Yet, it is frequently treated as an economic “want,” facing taxation and regulation that suggest shelter is a luxury, not a requirement. This prevailing mindset needs a fundamental shift. If governments are genuinely committed to restoring housing affordability, they must cease to view housing as a mere revenue source and start treating it as essential infrastructure.
Both the federal and Ontario governments have implemented temporary measures aimed at reducing housing taxes and lowering development charges (DCs). However, the persistence of excessive fees, sluggish approval processes, and outdated regulations continues to inflate the cost of homes beyond what is necessary. The severity of the crisis is underscored by the latest figures, which indicate a slim chance of meeting housing supply targets. Concurrently, demographic trends suggest that demand for housing will remain strong, making it clear that the affordability crisis cannot be overlooked.
The current landscape starkly contrasts with the situation 25 years ago, when a typical home cost approximately three to four times a household's annual income. Presently, in many Ontario markets, this ratio has escalated to seven to nine times income. A report from the Ontario Home Builders' Association in 2025 reveals that homes in major markets such as Toronto, Hamilton, Kitchener-Waterloo, Guelph, and Barrie now require more than seven times the annual pre-tax income of households. For many young families, the dream of homeownership is fading.
Compounding the crisis is the weakening pipeline for ownership housing. Recent analysis by Desjardins economist Kari Norman indicates that while rental construction has surged, condominium developments have plummeted. Over the past year, rental starts have reached approximately 130,000 units, while condominium starts have dipped below 50,000 for the first time since the global financial crisis. Factors such as elevated construction costs, financing expenses, and government fees have rendered many condominium projects prohibitively expensive at current selling prices.
While Canada is successfully building more rental housing, which is urgently needed, there is a troubling decline in the number of homes available for purchase. A growing body of research, including studies commissioned by RESCON, highlights that taxes, fees, and government-imposed charges are now a significant contributor to the overall cost of housing, accounting for around 36 percent of the price of a new home. Development charges in Toronto alone have surged by more than 5,000 percent over the last 25 years, adding tens of thousands, and in some instances over $100,000, to the price of newly built homes.
Looking forward, several priorities should guide the next phase of housing reform. Firstly, the new HST rebate on housing should be made permanent. While the recent tax relief measures are a step in the right direction, temporary programs create uncertainty for builders and buyers alike. Secondly, reductions in development charges should also be established as a permanent fixture. The Canada-Ontario Development Charge Reduction Program is currently aiding municipalities in cutting charges by 30 to 50 percent for a limited time, but these gains will vanish if the reductions are not maintained.
Thirdly, Ontario needs to aggressively pursue building code and regulatory reform. The government is in the process of reviewing the building code, and long-delayed measures—such as permitting single staircases in mid-rise apartment buildings and lifting restrictions on floor plate sizes and angular planes—could significantly enhance housing supply without compromising safety.
Fourthly, governments must modernize and streamline the approval processes. Builders are currently facing lengthy and unpredictable approval timelines that inflate costs and introduce uncertainty into projects. In a province grappling with a housing shortage, such inefficiencies are no longer sustainable. Fifthly, Ottawa should revisit policies originally designed for a different market context. Mortgage stress tests and foreign buyer restrictions were implemented to cool an overheated housing market during the pandemic, yet the current market environment is markedly different. At the very least, restrictions on foreign buyers for newly constructed homes should be reconsidered.
Lastly, land transfer taxes, particularly Toronto's municipal land transfer tax, should be eliminated, as they do not contribute to increasing housing supply and serve only to create additional barriers to homeownership. While governments deserve recognition for the progress achieved thus far, restoring housing affordability will not be accomplished through half-measures or temporary initiatives. The solutions are increasingly clear, and the challenge now lies in securing the political will to complete the necessary reforms.

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