There is a growing recognition across Canada that the housing crisis demands urgent action.
Governments, particularly at the federal and provincial levels, have begun to respond with measures aimed at improving affordability. But they still amount to nibbling at the edges of a much deeper problem: the escalating burden of government-imposed costs (GICs) on new housing.
In Ontario, taxes, fees, and levies have become unhinged from reality. For many homebuyers, the price of a new home is no longer driven primarily by land, labour, and materials. Increasingly, it is shaped by the cumulative weight of GICs - which have grown dramatically over the past two decades.
The typical house price-to-income ratio in Ontario has roughly doubled, moving from about 3-4 times a typical middle-income household’s annual income in 2000, to 7-9 times in 2022. In the GTA, ratios have more than doubled for every type of housing except apartments since 2005.
Development charges (DCs), for example, have evolved from a relatively modest cost into one of the largest components in the price of a new home.
In many parts of the GTA, DCs alone now add well over $100,000 to the cost of a typical family home. In Toronto, DCs on a single-detached home surged to roughly $141,000 as of late-2024 — a staggering increase from just over $12,000 in 2010.
This trajectory is not merely unsustainable — it is economically counterproductive.
Fifteen years ago, a report commissioned by RESCON warned that GICs were already consuming a significant share of new home prices. At the time, the costs accounted for 13% of the price of a single-detached home in Toronto, 18% in Vaughan, and 17% in Mississauga.
Today, that share has ballooned. With sharp increases in DCs and sales taxes, direct GICs are now at 36% in Ontario. Think about it for a moment: That means more than one third of the price of a new home is attributable to government policy.
The implications are profound. In practical terms, the rise in GICs means that even middle-income families are increasingly priced out of homeownership.
DCs in particular function as a regressive tax. They are levied upfront and embedded in the purchase price of a home, meaning they disproportionately affect first-time buyers and young families — those least able to absorb additional costs. Unlike other forms of taxation, they are largely invisible to consumers, rolled into mortgages and paid off over decades with interest.
This approach to infrastructure financing — relying heavily on new housing to fund growth — has turned homebuilding into a fiscal tool rather than a policy priority. In effect, new homebuyers are being asked to shoulder costs that, in many cases, benefit the broader community.
The scale of these increases is difficult to overstate. Over the past 25 years, DCs in Toronto have risen by more than 5,000% — far outpacing inflation, which increased by just over 70% during the same period, according to the Missing Middle Initiative. This is not in any way a sustainable model.
Rising DCs directly impact housing supply. As costs rise, fewer projects are financially viable. Builders delay or cancel developments, and the pace of construction slows. The result is a tightening of supply at precisely the moment when Canada needs to accelerate homebuilding.
Steps taken recently by the Ontario and federal governments to support the vital reduction of DCs will help boost the residential construction sector and make homes more affordable. So will the joint decision by the two governments to temporarily eliminate the HST on new homes up to $1M in Ontario.
However, other GICs continue to climb. Some municipalities — like Clarington, having implemented a staggering 40% increase in DCs in late-2025 — are now proposing additional hikes to planning and development fees - some as high as 187 per cent - including a 136-per-cent jump for major official plan amendments and a 62-per-cent increase for zoning bylaw amendments.
So, there is more work to be done.
CMHC estimates that Canada needs millions of additional homes by 2030 to restore affordability. Achieving this level of construction will be impossible if all governments are not on the same page. There is no point in one government reducing fees while another hikes them.
The stakes could not be higher.
All levels of government must be working toward a common goal and making it easier and more affordable to build new homes.
