Regulations cost single-family home buyers in Canada’s hottest markets an extra $229,000 on average, C.D. Howe finds
Municipal infrastructure charges are ‘flawed’ because they get passed on to buyers, says think tank
TORONTO — Buyers in Canada’s most overheated real estate markets paid an average of $229,000 extra per home between 2007 and 2016 because of regulations making it difficult for builders to construct more single-family houses, said a new study.
Research from the C.D. Howe Institute released Tuesday revealed zoning regulations, development charges and housing limits in and around southern Ontario’s Greenbelt have added around $168,000 to single-family houses in the Greater Toronto Area and about $644,000 to the cost of others in Vancouver — a number the non-profit research organization says draws comparisons with Manhattan and U.K. housing.
The organization’s study also found regulations caused single-family home prices in Victoria to increase by about $264,000, Calgary costs to jump by $152,000 and Ottawa-Gatineau’s to spike by about $112,000.
Benjamin Dachis, C.D. Howe’s associate director of research and a co-author of the study, said development charges levelled by cities to fund the infrastructure needed for new housing are largely responsible for some of the increases.
“Most people can’t afford to pay for their house all up front with cash, so they get a mortgage and pay for a house over time, but that is not what cities are requiring. They are requiring developers to pay for the municipal infrastructure all up front and not over time, so that all gets loaded onto the sticker shock of housing,” he said.
Dachis said his study proves that the charges are “flawed” because they get passed on to buyers. He thinks cities should look to allow them to be paid over the course of a house’s existence, rather than when it is built, to help mitigate skyrocketing prices.
Article Sourced From: Financial Post by Tara Deschamps, May 15, 2018