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By Conrad Eder

Bureaucracy and bad policy, not demand, are driving up housing prices

Imagine putting down a hefty deposit on an $800,000 pre-construction condo only to find out at closing that your unit is now worth $1 million.

That’s a $200,000 shortfall. Since banks lend based on appraised value, you’re left with two choices: cough up the extra cash or walk away and kiss your deposit goodbye.

Canada’s housing affordability crisis isn’t just about rising prices—it’s about a broken system that can’t keep up with what people actually need.

This isn’t an isolated nightmare. In major cities across Canada, appraisals are landing 10 to 30 per cent below contract prices. And it’s exposing a deeper dysfunction in our housing market.

Toronto alone has more than 24,000 unsold new condos. Units that once attracted investors and young professionals now sit empty while developers keep building more of the same—small, overpriced boxes nobody’s clamouring for. Meanwhile, buyers are hunting for larger, livable spaces they either can’t afford or can’t find.

Yet despite the demand for larger, livable spaces, the system keeps producing what no one really wants.

How did we get here? It’s not just about supply and demand. It’s about municipal red tape and sluggish approval systems that choke off the market’s ability to respond to changing needs.

If we’re serious about affordability, we have to fix this bottleneck. That starts with slashing approval timelines so homes can actually be built where and how people want them.

These delays don’t just frustrate builders: they limit housing supply, inflate prices and leave Canadians competing for homes that don’t fit their lives or budgets.

Across the country, getting from concept to construction can take years. The planning grind—permits, consultations, rezoning, environmental assessments—drags on and racks up indirect costs of as much as $5,576 per unit per month.

In Toronto, approvals average 25 months. That delay alone can tack on more than $100,000 to the final price of a condo. In Hamilton, it’s 31 months.

And those delays don’t just raise costs—they throw off timing. By the time a project finally breaks ground, the market has often moved on, leaving developers stuck delivering yesterday’s housing to today’s buyers.

Even those who can afford larger units hesitate to commit. Who wants to wait years just to move in, especially when the price is climbing the entire time?

Unsurprisingly, larger units are often the last to sell—too costly for most, too delayed for the rest.

The result? A steady stream of undersized condos that few actually want, offered at prices most can barely justify.

Yes, regulation has a place. But among the 35 member countries of the Organization for Economic Co-operation and Development (OECD), Canada ranks 34th in approval speed, with an average of 249 days. That’s not oversight—that’s paralysis. Countries with similarly strong environmental and safety standards manage to approve projects in half the time. So what’s our excuse?

It doesn’t have to be this way. Some cities are proving that faster approvals don’t mean cutting corners—they just mean cutting red tape. Between 2022 and 2024, Halifax slashed its approval timelines from 20.8 months to 9.8. Edmonton went from 10.5 months to just 3.4, without compromising
safety or public input.

Other cities could follow suit by adopting tools like automated same-day permits, consolidating overlapping policies, creating fast-track review lanes for compliant developers and publishing timelines to inject predictability and accountability into the process.

Let’s be clear: this isn’t about giving developers a free ride. It’s about giving Canadians more choice, better options and a fighting chance at ownership.

Unlike interest rates or material costs, these delays are entirely within government control. If policymakers actually want a responsive housing market, they need to stop jamming the gears.

They aren’t stuck with these timelines. They’re choosing them. And those choices are making housing more expensive while preventing the market from delivering what Canadians need, when they need it.

Conrad Eder is a policy analyst at the Frontier Centre for Public Policy.

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From the Fraser Institute

By Austin Thompson

While there are many reasons for Canada’s housing affordability crisis, taxes on new homes—including the federal Goods and Services Tax (GST)—remain a major culprit. The Carney government is currently advancing legislation that would rebate GST on some new home purchases, but only for a narrow slice of the market, falling short of what’s needed to improve affordability. A broader GST rebate, extending to more homebuyers and more new homes, would cost Ottawa more, but it would likely deliver better results than the billions the Carney government plans to spend on other housing-related programs.

Today, Ottawa already offers some GST relief for new housing: partial rebates for homes under $450,000, full rebates for small-scale rental units (e.g. condos, townhomes, duplexes) valued under $450,000, and a full rebate for large-scale rental buildings (with no price cap). Rebates can lower costs for homebuyers and encourage more homebuilding. However, at today’s high prices, these rebate programs mean most new homes, and many small-scale rental projects, remain burdened by federal GST.

The Carney government’s new proposal would offer a full GST rebate for new homes—but only for first-time homebuyers purchasing a primary residence at under $1 million (a partial rebate would be available for homes up to $1.5 million). Any tax cut on new housing is welcome, but these criteria are arbitrary and will limit the policy’s impact.

Firstly, by restricting the new GST rebate to first-time buyers, the government ignores how housing markets work. If a retired couple downsizes into a new condo, or a growing family upgrades to a bigger house, they typically free up their previous home for someone else to buy or rent. It doesn’t matter whether the new home is purchased by a first-time buyer—all buyers can benefit when a new home appears on the market.

Secondly, by limiting the GST rebate to primary residences, the government won’t reduce the existing tax burden on rental properties—recall, many small-scale projects still face the full GST burden. Extending the rebate to include rental properties would reduce costs, unlock more construction and expand options for renters.

Thirdly, because the proposed GST rebate only applies in-full to homes under $1 million, it will have little effect in Canada’s most expensive cities. For example, in the first half of 2025, 31.8 per cent of new homes sold in Toronto and 27.4 per cent in Vancouver exceeded $1 million. Taxing these homes discourages homebuilding where it’s most needed.

Altogether, these restrictions mean the Carney proposal would help very few Canadians. According to the Parliamentary Budget Officer, of the 237,324 housing units projected to be completed in 2026—the first full year of the proposed GST rebate program—only 12,903 (5.4 per cent) would qualify for the new rebate. With such limited coverage, the policy is unlikely to spur much new housing or improve affordability.

The proposed GST rebate will cost a projected $390 million per year. However, if the Carney government went further and expanded the rebate to cover all new homes under $1.3 million, it would cost about $2 billion. That’s a big price tag, especially given Ottawa’s strained finances, but it would do much more to improve housing affordability.

Instead, the Carney government plans to spend $3 billion annually on “Build Canada Homes”—a misguided federal entity set to compete with private builders for scarce construction resources. The government has earmarked another $1.5 billion per year to subsidize municipal fees on new housing projects—an approach that merely shift costs from city halls to Ottawa. A broader GST rebate would likely be a more effective, lower-risk alternative to these programs.

Finally, it’s important to note that exempting new homes from GST is not a slam dunk. GST is one of the more efficient ways for the federal government to raise revenue, since it doesn’t discourage work or investment as much as other taxes. GST rebates mean the government may increase more economically harmful taxes to recoup the lost revenue. Still, tax relief is a better way to increase housing affordability than the Carney government’s expensive spending programs. In fact, the government should also reform other federal taxes on housing-related capital gains and rental income to help encourage more homebuilding.

The Carney government’s proposed GST rebate is a step in the right direction, but it’s too narrow to meaningfully boost supply or ease affordability. If Ottawa is prepared to spend billions on questionable programs such as “Build Canada Homes,” it should first consider a more expansive GST rebate on new home purchases, which would likely do more to help Canadian homebuyers.