Looking at the latest data, through August, housing starts in Alberta are up 44 per cent compared with last year.PATRICK DOYLE/The Canadian Press
Alberta’s population is booming and the province’s housing sector is rushing to respond. Ontario’s population is booming – and the province’s housing sector is struggling to respond.
Housing has never been an area of the economy that can immediately respond to demand. New arrivals in a city often outpace the industry’s ability to produce new homes. The business of building operates more like the slow turns of a supertanker than the nimble shifts of an F1 car.
Yet there are ways to speed the process. It starts with governments in part getting out of the way.
This space last week highlighted the need to rectify long-standing productivity woes in the construction business, as Canada aims to build many more new homes in the coming years to alleviate housing costs.
Government policies and actions can make a difference, by addressing all the steps and work before any construction occurs. The results appear to be playing out this year in Alberta and Ontario, specifically in the province’s largest cities.
Looking at the latest data, through August, housing starts in Alberta are up 44 per cent compared with last year. Starts in Edmonton are up almost 50 per cent. In Calgary they’re up by a third.
Meanwhile, the two Alberta cities are on top of the population growth charts: Calgary (up 5.9 per cent) and Edmonton (4.1 per cent) lead the country’s large cities, on a percentage basis. These numbers, reported this May, are as of mid-2023. Since then, Statistics Canada figures show, as of this April, Alberta’s population rose 4.4 per cent from a year earlier, the most of any province.
Ontario of course is growing fast too, its population up 3.5 per cent in the past year. That comes on top of growth in the Toronto region of 3.3 per cent between mid-2022 and mid-2023. Housing starts in 2024, however, are down in Toronto and the province, by about 15 per cent.
A key difference between east and west is in the rules, from how long it takes to garner housing approvals to how much new housing is allowed in the zoning rules that dictate what gets built where.
Edmonton, with its near 50-per-cent increase in housing starts, is a leader. It was ahead of other cities in its reform of citywide zoning, which became official this year. Edmonton jettisoned what it called “outdated regulations” that led to an “overly complex and restrictive” system. Toronto has been slower to reform its zoning.
Edmonton also worked to approve new housing more quickly. It has said it can move development applications across the finish line twice as fast as Toronto.
Then there’s taxes on new housing, dubbed development charges – a strategy cities have used to artificially keep property taxes low at the cost of slowing new homes. Such taxes have escalated wildly in Toronto and across Ontario over the past decade, more so than in Alberta.
All these factors – density, approvals, taxes – are part of what the federal Liberals’ housing accelerator program is designed to change. The program has doled out money to cities across the country as they’ve pledged improve their systems.
In a study of cities across Canada, put out by residential builders, Edmonton and Calgary rank near the top for approval times and reasonably low taxes on new housing. Toronto ranks last in both.
Toronto and Ontario need to do a lot more on housing – and they need to look at what’s working in Western Canada, from zoning reform in Edmonton, Calgary and provincewide in British Columbia, to the speedier processes to approve new homes in Alberta.
The gaps between regions are too hard to ignore. Housing starts per capita in Calgary and Vancouver last year were more than 50 per cent higher than Toronto. Per-capita starts in Calgary this year are more than double that of Toronto and Edmonton’s are close to double.
Canada Mortgage and Housing Corp. said this year that if regions such as Toronto can increase their rate of housing starts to per-capita recent levels in Western Canada, the country would be well on the road to a far-and-away record level of housing starts of more than 400,000 a year. Instead, Canada’s rate of home building is stuck around 250,000.
The evidence is clear. The work to reform the many restrictive rules around new housing can produce results. It’s a simple lesson: Emulate Edmonton.