Permits to build new Ontario condos soar by 25% as new policies speed approvals

All multi-dwelling permits were up 13.6% in February in Ontario, Statistics Canada reports, led by condo building construction at 25.4%. Home builders say they are trying to provide “as much supply as they can to meet demand.”

Thestar.com
April 18, 2023
Clarrie Feinstein

Building permits for multi-unit dwellings are on the rise in Ontario as the province continues to face pressure from increased demand and a critical shortage of housing.

The total value of building permits in Canada increased by 8.6 per cent to $10.7 billion in February compared to January, indicating “robust intentions” for both residential and non-residential sectors, according to a recent Statistics Canada report.

Seven provinces reported monthly increases, with notable gains in Ontario, especially for multi-dwelling units, such as condos and townhouses.

Multi-dwelling permits in Ontario sharply increased by 13.6 per cent in February compared to January, led by a variety of large value permits, or condo building construction, which jumped 25.4 per cent, the report said.

“The demand for new homes since the pandemic has skyrocketed,” said Luca Bucci, CEO of the Ontario Home Builders’ Association. “We’re seeing our members trying to provide as much supply as they can to meet demand.”

In 2022, the federal government announced a plan to welcome half a million immigrants a year by 2025, of which many newcomers are skilled workers looking to potentially buy a home or rent.

Because the GTA has limited land availability building highrise towers is a cost-effective way to produce more housing, Bucci said. “The cost to build over the last few years has increased substantially, so multi-dwelling units are the more economical option,” he added.

Yearly construction costs for residential buildings rose the most for single-detached houses, by almost 21 per cent, and townhouses by more than 20 per cent, from 2021 to 2022, according to StatsCan. And for non-residential buildings costs increased by 12.5 per cent -- the highest annual increase since 1981.
That’s why building more condos is economically more attractive for developers. It’s resulting in a record 25,000 new condominium unit completions slated for 2023 with an additional 100,000 units set to be completed between 2024 and 2028, according to research firm Urbanation.

Premier Doug Ford’s government is also partly the reason for the rise in building permits due to policies like the More Homes Built Faster Act, which aims to speed up development, said Shawn Ramautor, a sales representative with Royal LePage Wolle Realty in Kitchener.

“We’re seeing a lot of these permits now because of the provincial government’s policies,” he said.

Multi-dwelling permits can also be used for turning a residential home into a duplex or triplex, or building a laneway house, which is a faster way to build more units than building a condo tower, he said.

While there has been an uptick in permits, an overall shortfall in housing still plagues the sector.

The provincial government’s goal is to build 1.5 million homes by 2031. But it is already off target, according to the 2023 budget. Around 80,000 new housing starts are set to be built per year for the next three years, but to reach Ford’s goal in the next decade, closer to 160,000 housing starts are needed.

Last year, economists forecast that real estate and construction of new builds would take a hit in 2023 due to a possible recession. But the sector will be able to “weather the storm” due to high demand, said Bucci.

It’s possible that in order to meet demand more building permits for multi-dwelling units will be reported in the coming year, said Christopher Alexander, president of Re/Max Canada.

“The prospect for long-term health in Canadian real estate is really strong, so people will try and provide housing as a vehicle for investment,” he said. “There is an appetite for densification.”