Supply the answer for housing woes: Fraser Institute
September 7, 2017
Increasing the supply of housing would do more to lower housing costs than attacking buyer demand through restricting mortgage access or taxing foreign buyers, according to the Fraser Institute.
A recent Fraser Institute study estimated the impact of government regulations on the supply of new housing in Canadian metropolitan areas, including the Greater Toronto Area (GTA). The study compared the number of new housing units that should have been built based on underlying demographic and economic factors to the number that were actually built. The results were clear—fewer new units were built in the most desirable neighbourhoods, notably in Toronto.
According to Steve Lafluer, a senior policy analyst at the Fraser Institute, the reason is long delays for building permits.
“The shortest approval timelines for building permits in the GTA [Burlington] are ten months shorter than the longest [Georgina], and per-unit costs for regulatory compliance in Hamilton [$21,000] are half what they are in Toronto [$46,500)],” Lafluer commented in a paper co-written by Fraser Institute senior analyst Josef Filipowicz.
Given that the province found only a small percentage of housing sales involved foreign buyers (which are now subject to a sales tax), “local governments would likely make more progress on home prices by eliminating undue housing supply restrictions,” the Fraser Institute study states.