What role do land developers and home builders play in housing prices?

Infographic depicting purchasing power changes and house affordability due to new stress test
Stress test changes maximum house affordability

Developers and home builders build in a highly regulated market.

Housing in Ontario is regulated both on the supply side (what, where and how you build new homes) and on the demand side (mortgage rules, stress test, foreign buyer tax).

Working with governments, our industry can influence housing prices in a variety of ways:

  • How land is used (density, home sizes)
  • Building design
  • How the homes are built (size, materials used)
  • The total number of houses built (new housing inventory)

Furthermore, the three biggest elements that go into the price of a new home are:

  1. The price of land
  2. The cost of building
  3. Government fees, taxes and charges on new homes (that accounts for approximately 22-24% of the cost of a new home in the GTA)

In general, many of the costs associated with building have been increasing. Since 2006, the cost of building lots in the GTA has increased over 300%, as have construction materials and labour costs. For example, steel tariffs have resulted in the cost of rebar increasing by 4% and overall development charges have on average increased by between 236% and 876% across the GTA since 2004.

For these reasons and more, we have been very vocal in supporting regulatory changes that would enable us to build more homes faster. These changes would help us address barriers to building homes and allow us to build to higher density in and around transit corridors to meet the increasing needs of all of us in the GTA.

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