How Ontario's Growth Plan hurt housing affordability

In June 2006, the province of Ontario brought in the Growth Plan for the Greater Golden Horseshoe to plan for growth, protect the environment and help achieve a high quality of life for Ontarians by increasing density. The intent of the policy was to build up in GTA cities instead of out in the suburbs. The policy has had its intended outcomes, but unfortunately, it has also had the unintended consequence of contributing to the increase in the prices of new homes in our region.

The Plan aimed for more compact development and for less land to be used to accommodate more people and jobs. Among the Plan’s series of policies and targets was the requirement for 40 per cent of all residential development to occur within existing communities in order to reduce urban sprawl. The updated Growth Plan, which came into effect in 2017, has raised that target to 50 per cent until 2031 and 60 per cent thereafter.

Onerous implementation

Implementing the Plan has been onerous, to say the least. Municipalities have had to adapt to its guidelines and have faced challenges from all sides. Initially there was a lack of market demand for high-density living. Buyers still wanted their single-family homes and balked at condos. There was resistance from long-term residents who did not like how the faces of their neighbourhoods were changing, and the demand for higher-density communities put a strain on existing infrastructure, slowing down construction as new infrastructure was slow to come on line.

As the Plan envisioned, since 2006, the new-home industry has built far more high-density condo developments and fewer single-family homes. According to the Altus Group’s new-home sales data, as of April 30, 2018, there were only 4,339 single-family homes available for purchase in the GTA. That is a 74 per cent decrease from the 16,560 new single-family homes that were available at the end of June 2006, when the policy came into effect.

Huge disparity

However, despite the industry building to government policy, demand for single-family homes is as strong as ever, and that has had an impact on prices. The benchmark price for a new single-family home in April 2018 was $1.15 million. Seeking more affordable options, many new homebuyers have now turned to purchasing new condos, which in turn has driven up the prices, with the benchmark price for a condominium apartment at $739,965 in April 2018. Today in the GTA we have a huge disparity between the new housing type that is available for purchase and what consumers can afford to buy.

Reducing perceived urban sprawl is a well-intentioned goal. However, poor implementation of the Growth Plan has had an effect on new-home prices. As the municipal elections approach, we encourage voters to talk to candidates to expedite the availability of designated land, make it shovel ready with the right infrastructure in place, and zone land appropriately so the industry can build homes that people can afford to buy.

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