Jon Love: The housing crisis has a simple solution — and it doesn't involve yet another government program

We continually hear from various levels of government about the latest programs, subsidies and other plans to deal with the housing crisis, but they always target symptoms, not the cause. And the source cause of Canada’s housing issues is straightforward: excess taxation and intense regulation on construction, which limit supply and elevate cost.

We tax and regulate the things we want to discourage: cigarettes, alcohol, gas and surprisingly, housing. In 1980, when I added a 10×10-foot breakfast addition to my 1940s home, a permit cost $25 and took one day. Today, one would be exposed to public hearings, thousands of dollars for architects, lawyers and consultants and a process of a year or more.

Housing in Canada is in crisis because demand has simply outpaced the supply of new homes. Peak housing starts occurred in 1976, when 273,000 new homes were delivered — to a population of some 23.5 million people. Today, with 41.5 million Canadians, we are still below that peak. It is why Canada has the fewest homes per capita in the G7, 25th in the Organization of Economic Co-operation Development (OECD).

Prices rise when demand exceeds supply,. It’s a law of economics. Added to this imbalance is the cost burden of excess taxation and regulation on new home construction, which gets passed on to the buyer or renter.

Today in Toronto, about one third of the cost of all forms of new housing is taxes, fees, levies, etc., from all three levels of government, while purpose-built apartment buildings get an HST exemption. If all these charges on construction were waived, required rental rates would drop by one third, making many stalled residential projects viable and adding new supply at a reduced cost. When new supply is added, the