January 29, 2019

Premier Ford wants to build Ontario out of its housing crisis

Ontario Premier Doug Ford is pushing to eliminate housing shortages in Canada’s largest province, as policy makers seek to deflate pricey markets in places like Toronto without triggering a correction.

Ford’s housing minister, Steve Clark, began consultations this month on proposed reforms that would give local governments more control over their own housing mix to unlock supply and attract investment. In a background document released in November, the ministry touted the economic benefits of adding 10,000 housing starts a year, an amount builders estimate would bring supply closer to demand.

Supply side measures are seen as critical to restoring affordability in some of Canada’s largest cities like Toronto, where prices have doubled since 2010. They would also ease pressure on policy makers to implement demand curbs that are seen as unnecessarily disruptive.

“We have to remove the barriers and the red tape that are getting ahead of housing being built at a more affordable cost,” Clark said in a telephone interview, describing the affordability issue as a “crisis.”

There is already growing concern that tighter mortgage regulations and other recent changes may have overshot, given last year’s plunge in transactions. Demand measures are blunt instruments that apply to all markets regardless of affordability, and disproportionately affect low-income households and youth. Supply measures, in comparison, allow markets to continue growing, albeit at a more sustainable pace.

Toronto, along with Vancouver on the Pacific coast, has the lowest price elasticity of any urban market in Canada, meaning supply is the most out of sync with demand, according to a report last year from the federal housing agency.

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