Land policy drives new home prices up in GTA
October 25, 2017
One of the primary reasons that Greater Toronto Area (GTA) new home prices have soared in recent years is provincial urban land policy, such as the Greenbelt Act and the more recent Places to Grow Act, according to a report, Fall 2017 Fortress Market Manuscript, from Fortress Real Developments.
The 2005 Greenbelt Act permanently protects some land against development in the GTA. The province’s Places to Grow Act, introduced this July, is meant to “curb sprawl” and direct housing development to selected higher-density town centres.
“Land use planning has wide ranging and often unobserved economic and social consequences,” said Ben Myers, senior vice-president of market research and analytics with Fortress, and the author of the report.
Myers’ report also cites other factors as helping to push GTA new home prices higher including foreign buyers, house flipping, slow approvals of new developments, and a lack of new and resale supply.
Other concerns noted in the report include:
• Toronto had the fourth-highest annual housing price growth among top global cities in the first quarter of 2017 at 25 per cent. Toronto-area resale prices rose from $626,000 mid-year 2015 to $852,000 in April 2017, peaking at a 26 per cent annual increase.
• The time period needed to complete the approvals process in the City of Toronto has more than doubled in the past 10 years.
• Anti-development groups are looking out for the interest of neighborhoods they represent as opposed to future housing demands of the city. “Reducing political and [anti-development groups] planning influence in the GTA would help increase supply.”
• Approved developments are often significantly smaller than the proposed build, taking away dozens of possible homes, and stunting growth. “Municipalities need to incentivize developers to offer more three bedrooms for sale to accommodate more families in high-rise apartments,” the Fortress report suggests.