Canada's Housing Permit Pain
Development held back by tape comes with a cost.
Time is money. Somewhere along the line building housing turned into a nickel and diming process by municipalities with ever-growing planning departments adding more red tape to the process rather than simplifying it. This extra time adds more costs to housing prices, reduces productivity in the construction industry, and results in fewer dwellings being built.
Besides the unsustainable demand created by the Liberal government’s mass immigration policy, all of Canada’s housing issues start at the municipal level.
The burdensome and lengthy permitting process adds uncertainty to the construction industry which impacts competition and market entrance. It also adds tens of thousands of dollars (sometimes 100s) per house just in direct permit costs plus the additional costs that come from the months of trying to get the permits and working with planning departments.
Many of these charges have gone up double digits from the last research report, here are what the costs looked like in 2022 (most recent report):
Low-rise construction saw the average municipal charge increase by 25% to $61,600 per unit from 2020 to 2022. High-rise development saw their average municipal charge increase by 29% to $41,400 per unit.
When they drive up the costs to build a dwelling it also increases the overall cost of the dwelling as costs are part of the overall price people pay for housing.
Let’s remember that municipalities also charge property tax. Not only municipalities are making housing less affordable with their red tape and inefficiencies, but they are also double dipping as the overall cost of the dwelling they get to charge property tax on is more expensive which generates a higher property tax and further increases housing unaffordability.
Approval times take months and sometimes years. You talk to any developer or builder and you will get an earful of examples of how frustrating it is dealing with planning departments.
These red tape and inefficiencies are another example of an inflationary impact a poor-performing public sector has on our everyday lives. The problem gets magnified over time artificially driving prices up and creating scarcity.
Before even being overwhelmed by Justin Trudeau’s mass immigration policies, Canada has already lagged behind our peers in the total number of dwellings per 1,000 inhabitants. We lag behind G7 countries, and the EU and OECD’s averages.
Part of the work around the Liberal government’s housing strategy trying to achieve to overcome these municipal inefficiencies is to introduce a housing design catalogue of pre-approved and standardized dwelling options that could be just expedited to the starting line, and showering municipalities with hundreds of millions of dollars if they change zoning rules.
More money printing, more debt for the country instead of fixing the underlying issues that won’t be going away.
Throwing money at legacy ineffective processes is just kicking the can down the road and reduces the ROI of the money we are borrowing and what it can achieve. We need to be moving Canada and our communities forward better grounded.