By RESCON

June 1st, 2026

BURLINGTON, ON

The housing affordability crisis in Ontario is no longer a cyclical enigma that will magically correct with time.

It is structural, decades in the making, and the result of public policy failure.  The data tells a stark story. Without deliberate, co-ordinated reform across all orders of government, affordability will not return to historical
norms for at least another decade – if at all.

The scale of the problem is difficult to overstate. Housing starts in Ontario totaled roughly 12,700 units in the first quarter of 2025, the weakest quarterly performance since the aftermath of the 2008-09 financial crisis. In the GTA, new home sales collapsed to just 5,314 units in 2025.

This is happening even as the province targets 175,000 new homes annually. Actual delivery is falling short by more than 100,000 units per year.

The gap is not a blip. It is the result of four decades of policy accumulation that has fundamentally reshaped the cost structure of housing.  The affordability ratio – which is the share of household income required to carry home ownership costs – peaked at roughly 63 per cent in 2022, far above the long-run average of about 38 per cent. While it has eased to around 42 per cent in early 2025, it remains structurally elevated. Without reform, a full return to historical norms is unlikely before the mid-2030s.

The good news is that this crisis is, in substantial part, policy-constructed – and therefore policy-addressable – but only if governments are willing to undertake reforms that are politically difficult but economically necessary.

AFFORDABILITY CRISIS

Without deliberate, co-ordinated reform across all orders of government, affordability of housing will not return to historical norms for at least another decade – if at all.

First, there must be a permanent restructuring of development charges.

Government-imposed costs now account for 35.6 per cent of the price of a new home in Ontario. In some markets, municipal fees alone add between $102,000 and $196,000 per unit. In Toronto, the charges have risen more than 1,000 per cent since 2009 – vastly outpacing inflation.

These charges function as a hidden tax on new buyers, forcing them to finance infrastructure upfront that benefits entire communities over decades. The solution is straightforward in principle: shift infrastructure funding away from
upfront levies and toward long-term financing tied to asset lifecycles.

This would immediately lower entry costs for buyers and reduce the compounding “tax-on-tax” effect created when HST is applied on top of these fees.

Second, we must have enforceable limits on approval timelines. Time is money in housing development, and Ontario’s system is extraordinarily slow. Approval timelines in the GTA range from 14 to 25 months, nearly double the national average. Each month of delay adds thousands of dollars per unit in carrying costs.  The province must impose statutory limits – ideally under 12 months – with financial consequences if municipalities fail to meet them.

Third, Ontario should make HST relief permanent on new homes up to $1-million. The temporary nature of the recent announcement limits the impact. Making HST relief permanent – and ideally extending it through federal participation – would remove a significant demand-side barrier, particularly for first-time buyers. It would also improve market confidence.

Fourth, industrialized and offsite construction needs to be scaled up. Governments must actively support a transition toward modular and off-site construction through targeted incentives and procurement reforms. These methods can reduce construction timelines by up to 50 per cent.

Fifth, building codes need to be modernized to unlock missing middle housing. One of the most impactful reforms is the adoption of singlestair building designs for mid-rise construction. Widely used in Europe and recently embraced in B.C., this model allows for more efficient building layouts on smaller urban lots.

Requiring two sets of stairs makes many mid-rise projects financially unviable. Changing the rules could unlock a substantial share of urban land for gentle density and increase supply without altering neighbourhood
character dramatically.

Developers have put some of their projects on hold -no one is buying.

Together, these five reforms would address the core drivers of the affordability crisis: excessive government-imposed costs, regulatory delay, weak productivity, and constrained land use. They are practical, evidence-based measures that directly target the policies inflating housing costs. Without structural reform, Ontario will remain trapped in a cycle of undersupply and unaffordability.   Temporary measures – such as the short-term tax relief or funding agreements – will provide a brief reprieve, but they do not sufficiently
address the underlying problem.

Recent federal-provincial cooperation and growing political consensus around the severity of the housing crisis create the conditions for meaningful change. But that window will not remain open indefinitely.  Without action, an entire generation will be priced out of the market.

The goal of restoring affordability is achievable but only if governments are willing to confront the policies that created the problem in the first place – and commit to fixing them for the long term.