Lyall: Moving past baby steps.
November 25, 2025
By Richard Lyall
Governments have never been particularly good at lowering taxes, tackling inefficiencies and fixing underperforming operations. However, in light of the housing crisis we’re facing, that’s exactly what’s needed.
At a recent housing summit hosted by RESCON, one thing became abundantly clear. Taxes, fees and levies, red tape and runaway bureaucracy are killing the residential construction industry.
Although housing is a core economic need and central to our well-being, it has been badly mismanaged for decades. There has been a lack of aligned action, informed analysis and policy.
We are now at the point where bold, concerted action must be taken. Governments need to align and work in unison to solve the problem. The hill is daunting, but it is one that must be climbed.
The statistics are startling. The industry has stalled. People and families are leaving provinces like Ontario and heading to Alberta or the U.S. because they can’t afford housing price tags.
The cost of materials and labour, along with tariffs, have played a large part in driving up costs for residential building. In fact, the cost of constructing a residential building in Canada has increased 58 percent since 2020 and could rise even further, thanks to the U.S. tariffs, according to projections in briefing materials prepared for federal Housing Minister Gregor Robertson.
Meanwhile, the tax burden on new housing is weighing down the industry. Taxes, fees and levies, including development charges (DCs) have risen substantially.
Presently, 36 percent of the cost of a new home is attributable to the tax burden and DCs. And lengthy approvals processes only add significantly more to the cost of building a new home. DCs increased by a staggering 592 percent in Toronto between 2011 and 2023.
The result?
Individuals and families can’t afford the cost of a new home. And builders just aren’t building them.
The residential construction industry In Ontario, and specifically Toronto, is stagnant. According to CMHC, housing starts in Toronto through 2027 are expected to be well below what’s needed to restore affordability to the market. This means there will be less economic activity, more outmigration, more homelessness and, importantly, less tax revenue for governments unless there is further change.
Beyond the statistics, though, it is critical to remember that it is people who are affected. We’re talking about young people who are losing the hope of ever owning a home, who are increasingly unable to live near where they work, and must choose between eating or paying a mortgage.
At RESCON, we engage with a variety of other groups and associations, unions and stakeholders. It seems we are still facing the same problems that we did years ago – namely the tax burden on housing, cumbersome approvals systems, and the ever-increasing costs of building.
Governments are starting to notice. Recently, for example, both the provincial and federal governments committed to eliminating the sales taxes on new housing up to $1 million for first-time buyers and decreasing it on a sliding scale for first-time buyers of homes purchased between $1 and $1.5 million. Given the changes thus far, combined with interest rate decreases, it is a good time to buy for first timers.
This is an important first step for federal Housing and Infrastructure Minister Gregor Robertson and Ontario Municipal Affairs and Housing Minister Rob Flack as first-time buyers account for 35 percent of the new housing market. The next step should be to cut the sales taxes on new homes for all buyers – not just first-timers. Eventually lowering the tax burden for all buyers of new housing would move the needle significantly.
The economic impact of sitting on our hands will be devastating. At our housing summit, speakers noted that relatively few housing starts are expected in Ontario between 2025 and 2027, especially when it comes to condos, which will lead to a housing drought between 2028 and 2030.
The impact could be the loss of almost 100,000 construction jobs, which would result in a $10-billion economic hit to the province.
At the present rate, Ontario’s ambitious plan to build 1.5 million homes between 2023 and 2031 doesn’t add up. The feds, meanwhile, are targeting 500,000 homes a year for the next decade.
Further bold action is clearly needed. We now have some measurable efforts to reduce the tax burden further and cut excessive bureaucracy.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.
