Housing crisis can be fixed if governments are willing to act

By Richard Lyall

for Senso Magazine

June 4, 2026

Ontario’s housing crisis won’t fix itself. That may sound obvious to anyone trying to buy a home in the GTA, but it runs against the long-standing political assumption that markets eventually correct on their own.

In normal economic cycles, they often do. Prices rise too far, demand cools, supply catches up, and affordability gradually returns.

But Ontario is no longer dealing with a normal cycle. It is dealing with a structural affordability crisis that has been decades in the making - one built, layer by layer, through public policy.

That distinction matters because it changes both the diagnosis and the solution. If the crisis were simply cyclical, governments could step back and wait for lower interest rates or weaker demand to restore balance. Instead, the evidence now suggests the market has become so burdened by taxes, delays, regulatory friction and declining productivity that meaningful affordability will not return without aggressive government intervention.

The good news is that a policy-constructed crisis is also policy-addressable.

Ontario’s housing affordability ratio - measured as ownership costs as a share of median household income - peaked at roughly 63 per cent in 2022, far above the long-run historical norm of approximately 38 per cent. Although conditions have improved somewhat, affordability still sits above historic averages and is unlikely to normalize before the mid-2030s without structural reform.

The problem is that governments at every level have added enormous costs to producing housing while simultaneously slowing the pace at which homes can be approved and built.

Government taxes and fees now account for 35.6 per cent of the cost of a new home in Ontario. In practical terms, governments now make nearly four times more from a new home sale than the developer building it.

In Toronto, development charges alone have increased more than 1,000 per cent since 2009, rising from roughly $12,000 to nearly $138,000 for a single-detached home. Over the same period, inflation rose only about 41 per cent.

These costs are embedded directly into the purchase price paid by buyers, many of whom are already stretched beyond financial sustainability.

At the same time, the approval process has become painfully slow. In the GTA, development approvals routinely take 14 to 25 months, nearly double the national average. Every month of delay adds carrying costs, financing risk and uncertainty that builders must recover through higher prices.

The consequences are increasingly visible. Housing starts remain far below provincial targets. New condominium sales are frozen. Builders cannot secure financing because pre-sale thresholds are no longer being met. The market is not functioning normally because the economics no longer work.

Recent government interventions, while welcome, are insufficient on their own.

The new $8.8-billion Canada-Ontario Housing Partnership and temporary HST relief measures represent important acknowledgements that affordability has become a public policy emergency. But temporary relief cannot solve structural problems. Once these programs expire, many of the underlying cost pressures will simply reassert themselves.

To fix the problems, the following reforms could be introduced.

First, Ontario should permanently restructure development charges. Infrastructure costs should be financed over the life of the asset - the same way governments finance roads, transit and water systems - rather than forcing upfront payment onto individual homebuyers. Today’s system effectively treats new buyers as infrastructure financing mechanisms for municipalities.

Second, the province should impose statutory approval timelines below 12 months across Ontario. Municipalities that fail to meet those timelines should face automatic fee rebates and deemed approvals.

Third, the removal of HST on new homes under $1 million should be made permanent. Temporary tax holidays may stimulate activity for a year, but permanent reform changes long-term affordability calculations for first-time buyers and builders alike.

Fourth, governments need to aggressively modernize construction itself. Ontario cannot solve a housing shortage using methods that are becoming less productive every year. Large-scale incentives for modular, prefabricated and off-site construction could reduce project timelines.

Fifth, Ontario should adopt single-stair building code reform for midrise buildings up to six storeys. This would unlock thousands of missing middle housing opportunities on urban lots.

Without intervention, Ontario could become a province where home ownership is inaccessible to much of the middle class and economic growth slows because workers cannot afford to live near jobs.

The market alone can not solve the problem because the barriers are policy-created. Markets can respond to supply and demand signals, but they cannot independently remove taxes, accelerate permits or modernize building codes.

The encouraging reality is that the path forward already exists. Ontario still has a window to act. The question is whether governments are willing to pursue reforms large enough to match the scale of the problem.

Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.