May 6, 2008

Construction industry lobbies for study of housing affordability factors

VINCE VERSACE

staff writer

A study of the housing affordability problem would not only benefit society as whole but also the construction industry’s functionality, says the Residential Construction Council of Central Ontario (RESCON).

“Planners and policy makers typically blame the housing problem on high demand and a ‘housing boom’ or the high cost of land,” says Richard Lyall, president of RESCON. “The truth is low-rise housing starts have been falling since 2003 but costs have continued to escalate. Some of the underlying reasons for the housing affordability problem concern the inefficiencies in the enormous amount of time and effort it takes to get projects approved.” RESCON is calling for a Housing Affordability Impact Audit which would look at existing planning and building regulations and how they affect the delivery of both brownfield and greenfield development. RESCON has approached the Ministry of Municipal Affairs and Housing with the call for the audit. The amount of regulations the construction industry, both ICI and residential, has to deal with is staggering and that cost transfers to the end user and purchaser, notes Lyall.

“Every day land is held on to longer, as a developer waits for approvals, increases costs,” says Lyall. “Besides the regular costs of production, there are costs beyond their control found in inefficient processes.” Lyall also points to the various political approvals and channels heavy infrastructure builders face on road building, sewer and bridge projects as challenges and contributors to higher costs.

An audit of planning and building regulations could help explore anecdotal evidence from the construction industry which indicates significant indirect costs are generated from delays and inefficiencies in the approval process.

“There is currently no provincial process in place to review and look at the supply side economics of housing affordability, there is a need to review these costs and find savings,” Lyall says. “Also, the costs associated with processes, including the escalation in development charges, are well beyond any economic justification.”

First-time home buyer suffer the most from costs generated by inefficient process. The Canadian Home Builders’ Association estimates that for every incremental $1,000 increase in the cost of new housing, 6,000 potential new home buyers are denied the opportunity of new home ownership, notes Lyall.

“A detailed analysis and review is needed by all stakeholders to better understand housing cost factors,” says Lyall. “To tackle housing affordability reform, we need this information. You cannot improve something if you have not measured it. We need to do that so we can set targets.”

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