Unlocking Canada’s Housing Potential: Five Urgent Strategies to Overcome the Crisis

For many stakeholders in the residential construction industry, the challenges of 2025 felt like a distant memory to be left behind. However, as we look towards 2026 and beyond, the prospects for the sector remain equally precarious, threatening to exacerbate an already dire situation unless critical barriers to new housing development are swiftly and decisively addressed. Canada is currently grappling with the most severe housing crisis in generations, a multifaceted problem with profound economic and social repercussions.

Across the nation, ambitious housing targets are consistently being missed, while promising residential construction projects are frequently shelved or delayed due to a complex web of obstacles. This slowdown has led to a significant slump in new home sales, directly contributing to a disturbing trend of job losses throughout the construction and related industries. The human cost of this crisis is immense, as countless Canadians struggle to find affordable and suitable housing, leading to a visible out-migration from major urban centers. This exodus of talent and labor will undoubtedly impose a substantial, long-term toll on our national and regional economies, diminishing productivity and hindering growth.

Recent data underscores the severity of this downturn. A comprehensive report card commissioned by RESCON provided alarming insights into the state of housing starts. Specifically, municipalities within the Greater Toronto Area (GTA) and the Greater Golden Horseshoe (GGH) experienced a staggering 34 percent decline in housing starts during the first three quarters of 2025, when compared to the corresponding January-to-September periods from 2021 to 2024. The condo apartment segment, a critical component of urban density and affordability, bore an even heavier brunt, with starts plummeting by a monstrous 51 percent over the same nine-month period relative to the three preceding years. This drastic reduction in construction activity has translated into a loss of 35,377 person-years of employment, highlighting the far-reaching economic ripple effects of the housing crisis.

It is undeniably critical that we turn this tide. The persistent lack of affordable housing options is forcing individuals and families to leave our cities, eroding the very fabric of our communities and threatening our future economic competitiveness. The good news, however, is that viable solutions are within our reach. By implementing targeted policy changes and fostering greater collaboration, we can mitigate the crisis and lay the groundwork for a more robust and equitable housing market. With this imperative in mind, I propose five pivotal strategies to remedy the current situation and foster sustainable housing growth across Canada.

1. Drastically Reduce Taxes and Fees on New Housing

The first and most immediate step towards improving housing affordability and stimulating construction is to significantly lower the exorbitant taxes, fees, and levies imposed on new housing developments. These charges currently constitute an astonishing 36 percent of the final purchase price of a new home. To put this into perspective, for a home valued at $1 million, a staggering $360,000 of that cost is directly attributable to the burden of various governmental taxes and fees.

This approach to taxing new housing is fundamentally flawed. We are treating essential housing, a basic human need, with the same revenue-generating intensity typically reserved for discretionary goods like alcohol and tobacco. The crucial difference is that access to safe, affordable housing is a cornerstone of individual well-being and societal stability, not a luxury item to be heavily taxed.

Current Efforts and Legislative Hurdles

In recognition of this issue, both the federal and provincial governments have initiated steps to alleviate some of this tax burden. These efforts include proposals to eliminate the five-percent sales tax on new housing up to $1 million for first-time buyers, as well as introducing reduced taxes on a sliding scale for first-time buyers purchasing homes between $1 million and $1.5 million. The provincial government has further committed to aligning with the federal rebate, which would effectively mean an additional eight percent reduction off the price of new homes for eligible first-time buyers. However, the successful implementation of these crucial measures hinges on the passage of federal legislation.

Frustratingly, this vital federal legislation, known as Bill C-4, remains stalled in the Senate. Despite having received approval in the House of Commons and being subsequently sent to the Senate for review, senators voted to adjourn prior to Christmas, postponing further discussion until February 3rd. The Upper Chamber failed to complete its review before adjourning, leaving prospective first-time homebuyers in limbo and delaying much-needed relief to the housing market. This legislative bottleneck exemplifies the bureaucratic challenges hindering rapid progress in addressing the housing crisis.

Beyond sales taxes, a comprehensive review of all municipal, provincial, and federal charges on new construction is imperative. Reducing these financial barriers would directly translate into lower purchase prices, making homeownership more accessible and revitalizing the construction sector. It would also signal a governmental commitment to prioritize housing as an essential public good rather than primarily a revenue source.

2. Bring Development Charges Under Control

Secondly, the unchecked escalation of development charges (DCs) must be reined in. Development charges are fees collected from developers for new construction projects. Their original, justifiable purpose was to help fund essential growth-related infrastructure and services, such as the expansion of roads, water and sewer systems, public parks, transit networks, and police services, directly serving the new communities being built.

However, over time, the scope of what DCs fund has broadened significantly. Increasingly, these charges are being levied to finance projects that extend beyond direct growth-related services, including community-wide amenities like daycares and schools. This expansion of purpose places an unfair burden squarely on the shoulders of new home buyers, compelling them to disproportionately pay for infrastructure and services that ultimately benefit entire existing communities, not just the residents of new developments. This practice distorts the cost of new housing and exacerbates affordability challenges.

The Escalating Cost of DCs

The growth in these fees has been substantial and alarming, directly contributing to the worsening affordability crisis. A stark example can be seen in Toronto, where development charges for a typical one-bedroom apartment surged from approximately $10,000 in 2014 to an astounding $52,000 in 2024. Such exponential increases make many development projects financially unviable, particularly those aiming to deliver more affordable housing options. Developers, faced with these high upfront costs, are either forced to abandon projects or pass these significant expenses directly onto the consumer, inflating housing prices even further.

Despite the clear and present danger posed by escalating DCs, little action has been taken. Four years ago, the Ontario Housing Supply Task Force, a body specifically mandated to address housing challenges, explicitly recommended that urgent action be taken to curb these escalating charges. The continued neglect of this critical issue demonstrates a significant policy gap and a failure to implement expert advice, contributing directly to the ongoing housing supply shortage and affordability crisis. Governments must explore alternative funding models for community-wide infrastructure that do not disproportionately burden new homebuyers, ensuring that the costs of growth are equitably distributed across the entire community benefiting from it.

3. Streamline and Modernize the Approvals Process

Third, a fundamental overhaul of the housing approvals process is long overdue. The current system is characterized by its excessive complexity, protracted timelines, and archaic, often paper-based procedures. To significantly boost housing supply and reduce construction costs, this process must be radically simplified, dramatically sped up, and fully digitized onto a common, open-source platform. This modernization effort would mirror best practices observed in more advanced and efficient jurisdictions globally.

The Detrimental Impact of Delays

The current system is riddled with inefficiencies, causing unacceptable delays. It can take an egregious amount of time—often up to two years—from the moment a developer submits a building application to the eventual receipt of final approval. These prolonged delays are not merely bureaucratic annoyances; they have significant financial implications. Every extra month a project is stalled translates into increased carrying costs for developers, including interest on loans, property taxes, and administrative expenses. These accumulated costs are inevitably passed on to the homebuyer, directly contributing to higher housing prices. Moreover, these delays stifle innovation, deter investment, and ultimately restrict the flow of much-needed housing units into the market.

The benefits of a modernized, digital approvals process are multifaceted. A common open-source platform would introduce unprecedented transparency, allowing all stakeholders, including developers, municipal staff, and the public, to track the progress of applications in real-time. It would standardize procedures, reduce opportunities for human error, and streamline communication between various departments and agencies involved in the approval chain. Solutions such as the “One Ontario” initiative offer a promising blueprint for such a digitized, integrated system. Embracing technology to eliminate redundancies, accelerate reviews, and facilitate concurrent approvals is not just an option; it is an essential step towards creating a responsive and efficient housing development ecosystem.

4. Enhance Coordination in Housing Policy

Fourth, the current fragmented approach to housing policy, particularly concerning social housing and homelessness, must be replaced with a far more cohesive and coordinated strategy. Housing is a complex issue spanning multiple levels of government and various ministries, often leading to disjointed efforts, conflicting priorities, and inefficient allocation of resources. This lack of strategic alignment hinders comprehensive solutions and prolongs the suffering of those most in need.

The Case for a Super Ministry

To address this systemic issue, a bold and transformative step is required: the alignment of construction and housing portfolios under a new, powerful “super ministry” specifically focused on growth management. Such a ministry would be tasked with an integrated mandate, overseeing both housing development and critical infrastructure planning. Given the paramount importance of both housing and infrastructure to the province’s future economic prosperity and social equity, governments should adopt clearer accountability frameworks, establish ambitious yet achievable targets, and set transparent timelines for all housing-related initiatives. This approach, successfully implemented in various other jurisdictions, fosters a more strategic, results-oriented, and accountable governance model.

A super ministry would streamline decision-making, eliminate jurisdictional disputes, and ensure that housing policy is consistently integrated with broader economic development and urban planning objectives. It would enable a holistic approach to tackling the housing crisis, from accelerating market housing supply to providing adequate support for social housing initiatives and preventing homelessness. This consolidated oversight would facilitate long-term planning, enable better data collection and analysis, and ultimately lead to more effective and sustainable housing solutions for all Canadians.

5. Prioritize Fixing the Private Market Over Solely Public Programs

Finally, while innovative public programs and initiatives, such as promoting off-site construction methods and the new Build Canada Homes initiative, are valuable and play an important supplementary role, it is crucial to recognize that they alone will not solve the systemic housing crisis. These programs represent niche solutions or provide incremental gains; they are not designed to address the fundamental structural impediments that are crippling the nation’s housing supply.

Unleashing Private Sector Potential

The undeniable reality is that private-sector builders are responsible for constructing approximately 90 percent of Canada’s housing supply. This staggering proportion underscores their indispensable role in meeting housing demand. Therefore, it is absolutely critical that governments shift their primary focus towards identifying and systematically dismantling the existing barriers that are stifling this vital private market. These barriers are multifaceted and include, but are not limited to, the aforementioned excessive taxes and fees, convoluted and lengthy approval processes, restrictive zoning regulations, land availability challenges, and skilled labor shortages.

A broad coalition representing a diverse range of industry stakeholders, including developers, builders, and suppliers, has already formed to actively advocate for significant policy changes. Their key demands resonate with the strategies outlined here: broader sales tax relief, substantial reforms to development charges, and drastically faster planning approvals. These are not merely industry wish-lists but critical reforms necessary to unlock the private sector’s capacity to build more homes, faster, and more affordably.

Without concerted, decisive action from all levels of government to address these root causes, the dire circumstances faced by the construction industry and by Canadians seeking affordable housing will undoubtedly persist and worsen. Canada simply cannot compete effectively with other developed jurisdictions, such as the United States, if its housing market remains burdened by inefficiency, excessive taxation, and regulatory inertia. A strategic focus on enabling the private market, rather than solely relying on public programs, is the only sustainable path to overcoming the housing crisis and ensuring a prosperous future for all Canadians.