Land supply, cost concern builders
From the Condo Guide Magazine
Ontario home builders predict land supply constraints and the resulting increases in land costs will be a significant barrier to efforts by the provincial government to accommodate employment and population growth in its Places to Grow growth plan.
In the recent Ontario Home Builders’ Association survey of its builder members, over 35% of builders cited land supply worries as a major problem. In addition, almost 40% of the builders surveyed said land costs and availability are the biggest barriers to housing affordability in Ontario.
“It’s an uphill battle trying to maintain new home affordability,” notes Brian Johnston, President of OHBA who adds, “Unfortunately, provincial legislation designed to speed up and simplify the residential building process isn’t working as it was intended, and that’s leading to frustration and costly delays.”
The main barriers to producing affordable housing cited by the builders include availability and cost of land (35.4%), red tape or bureaucracy and regulation (14.5%), development charges (13.8%), labour and material costs (11.6%), and other barriers (21%).
Another major issue facing Ontarians is eliminating the infrastructure deficit. The relatively fast pace of growth in the province has left some areas without adequate roads, transit and related services. In the OHBA survey, one-third of home builders cited infrastructure as a top priority for the 2007 provincial budget.
“The government has its work cut out for itself, but let’s face it, quality of life is enhanced by smoothly functioning roads and transit for the residents of this province and Premier McGuinty needs to continue to address this issue,” comments Johnston.
The top provincial budget priorities expressed by the builders, in rank order, were: infrastructure (33%); balance budget (22%); health care (21%); personal/corporate tax reductions (19%) and other priorities (4.3%).
That typically small-c conservative builders would put infrastructure so far ahead of balancing the budget and reducing taxes is quite an emphatic statement, which sends a strong message not only to the provincial government, but to the federal government as well, that infrastructure, primarily roads, transit, sewer and water, are vital to sustainable development, housing affordability and choice.
As for barriers to implementing the province’s growth plan, it is fascinating to note that the second most significant barrier cited by the builders after availability and cost of land, was local politicians. This likely speaks to builders’ concern with local elected officials who have not bought into the growth plan and/or their experience with the resistance to intensification which they often meet at city hall as some local politicians pander to the anti-growth forces which exist in any community.
Not far behind in the ranking of growth plan barriers were consumer preference at 13.4%, and NIMBYism, at 12.6%. By consumer preference, the builders are expressing their buyers reluctance with respect to the more intense forms of development called for in the growth plan.
Zoning/official plans (10.2%) and conservation authorities (8.7%) completed the builders’ ranking of barriers to implementing the province’s growth plan.
The pessimists outweigh the optimists as 60% of builders surveyed expect new-home starts to decrease in 2007 compared to 2006. Another 28% of builders expect the market to stay the same in 2007 while 12% expect housing starts to increase.
The OHBA is forecasting a decrease from the 75,000 housing starts anticipated this year to 69,000 next year. Ontarians are projected to spend about $17 billion on home repair and renovations in 2007.
“We expect the housing market will still be healthy,” says Johnston, who encouraged the provincial government to move forward with planned infrastructure projects. “With almost four million people expected to settle in the Greater Golden Horseshoe by 2031, Ontario has to invest in infrastructure and needs to work on fiscal and regulatory policies that will promote intensification.”
The Condo Guide Magazine is an excellent source of housing information for those looking for information on new condos in Ontario, Canada. We offer the most up-to-date information on new condominiums across the greater Toronto area.
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