Holdups in new housing projects across the Greater Toronto Area will have extensive impacts on supply in an already tight market, a new report reveals.
The Building Industry and Land Development Association (BILD) surveyed its members and found 498 projects at various stages have been delayed, 276 of which are located in Toronto.
After examining the survey data, Altus Group concluded that these holdups will result in the loss of about 9,000 housing starts over the next 18 months. This will setback occupancy of more than 8,000 units by the end of 2021, potentially exacerbating an already existing shortage of housing in Toronto, reduce construction activity, and see the loss of 10,000 jobs per year.
Although the residential construction industry was granted essential workplace status under Ontario’s emergency orders, the industry was only able to complete homes that were near completion and work on critical infrastructure projects such as hospitals.
“One might ask, if the building industry was granted essential workplace status, why are there new housing slowdowns,” said Dave Wilkes, president and CEO, BILD. “The response is a bit complicated. Disruptions to the supply chain negatively impacted the ability of the industry to secure vital building materials. Worksites had to appropriately adjust to COVID-19 protocols as social distancing rules negatively impacted productivity and some municipalities had to adjust to working remotely. This slowed processing of planning and building applications and stalled developments and construction projects.”
The survey found that 65 per cent of new housing projects in Toronto reported interruptions of three to six months and 32 per cent were greater than six months. Eighty-three per cent of not yet above grade projects reported delays of three to six months and 11 per cent are greater than six months. Eighty-five per cent of projects under construction permitted for above grade reported a delay of three to six months and five per cent are greater than six months. This situation is reflected to a greater or lesser extent in most GTA municipalities.
Federal, provincial and municipal government revenues will also be detrimentally impacted by the loss of housing starts throughout 2020 and 2021. Lost revenues include $340 million in lost development charges, $13.5 million in lost education development charges (TCDSB), $26.0 million in property taxes, $364 million HST, $53.8 million in provincial land transfer tax and $52.5 million in lost municipal land transfer tax.
“Now more than ever, all levels of government must work together to make sure that proper measures are in place to remove barriers that will unlock consumer and industry construction investments to help kick-start the economy,” added Wilkes.