The Canadian Homebuilders’ Association (CHBA) has released its 2024 Municipal Benchmarking Study that examines how local development processes, approvals, and charges impact housing affordability and housing supply in major housing markets across Canada.
The study examines market trends and several municipal land-use planning-related factors that may be hindering the supply of housing and contributing to housing affordability issues in 23 municipalities across Canada. It also benchmarks these municipalities on approval timelines, municipal fees charged on new residential development and planning features.
The previous edition of the study was conducted in 2022. The latest edition of the study provides additional detail on how a municipality’s performance on these measures influences housing outcomes, including affordability and availability of housing for young families, as well as the total cost implications of these municipal processes and policies.
Additionally, the study includes the indirect costs to the construction process that accumulate on a development as its application goes through the application process.
“Development charges, delays, and inefficient processes at the municipal level directly impact the price of homes and how many are built. The purpose of this study is to facilitate dialogue with all levels of government, but particularly with municipal governments, on the effects of longer timelines, higher fees, and the level of efficiency of processes on housing affordability and outcomes. This report also offers insight into best practices that municipalities can adopt to help improve their housing affordability and supply. It also points to ways that the provincial and federal governments can continue to drive and support change at the municipal level,” said CHBA CEO Kevin Lee.
One key takeaway from the report was that all municipalities studied experienced explosive population growth between 2021 and 2023, along with immigration. Growth was limited in some of the larger municipalities studied. Toronto, Peel and Vancouver, had a significant outflow of residents through out-migration, as housing affordability deteriorated considerably in these areas.
According to the report, all municipalities have had significant difficulties ramping up housing production to keep pace with population growth experienced in the past few years. As a result, housing affordability, for both ownership and rental, has deteriorated to its worst level since the mid-1990s.
The report also noted that the 2022 to 2031 period is on track to be the decade with the fewest homes built per new persons added to the Canadian population since at least 1972.
The report found that the cities of Edmonton, Halifax, and London rank highest overall. When looking at the municipalities ranked in the bottom ten, seven are in Ontario, and two are British Columbia’s largest municipalities that were studied.
In terms of municipal fees charged on new residential developments, they went up by an average of $27,500 for a low-rise home since the 2022 study, raising the new average in Canada for municipal fees in these cities to $82,600 at the time of the 2024 study. For a high-rise home, municipal fees charged on new residential developments went up by an average of $3,000 since the 2022 study, raising the new average in Canada at the time of the 2024 study to $35,000.
Fewer application submissions are due to a combination of a challenging economic backdrop and costly application processes. In both Ontario and British Columbia, application submissions have fallen significantly since peaking in 2021. The decline has been driven by site-plan and/or development permit applications. More affordable markets, such as Alberta, have experienced an increase in application submissions.
Approval timelines also improved marginally from the previous study but remain high, and in some cases, the improvement is likely simply because of fewer applications being submitted.
“More needs to be done to address the housing crisis in Canada. The CHBA Municipal Benchmarking Study points out the barriers to getting more homes built and ways in which these barriers contribute to the cost of a new home,” said Lee.