Taxes and fees account for 36% of a new Ontario home's cost, RESCON president warns
Ontario has made real progress on housing affordability, but not enough. That is the verdict from Richard Lyall, president of the Residential Construction Council of Ontario (RESCON), who says governments must lock in six structural reforms if the province is to close a housing cost gap that has grown to its widest point in a generation.
Homes across Ontario's major markets — Toronto, Hamilton, Kitchener-Waterloo, Guelph, and Barrie — now cost more than seven times annual pre-tax household income, according to a 2025 report commissioned by the Ontario Home Builders' Association (OHBA).
Twenty-five years ago, the same ratio was three to four times income.
Ontario housing costs at a generational breaking point
The ownership pipeline is weakening precisely when it needs to strengthen. A recent analysis by Desjardins economist Kari Norman found rental construction reached roughly 130,000 starts over the past year, while condominium starts fell below 50,000 units, a level not recorded since the global financial crisis.
Elevated construction costs, financing pressures, and government fees have made many condo projects financially unviable at current selling prices.
Taxes, fees, and government-imposed charges now represent approximately 36% of the cost of a new home in Ontario, according to RESCON research.
Development charges (DCs) in Toronto alone have increased by more than 5,000% over the past 25 years, adding tens of thousands — and in many cases well over $100,000 — to the cost of a new build.
Read more: Ontario budget’s housing tax relief draws cautious applause from mortgage and real estate leaders
The pressure filters through to mortgage professionals working the new-home market.
"The problem with pre-con pricing is that even after this new rebate, it's still priced way higher than resale," Matthew O'Neil of Connolly Capital, Ontario, told Canadian Mortgage Professional in March.
"Even with the 13% knocked off, it still doesn't make sense from a pricing standpoint."
Six fixes to restore affordability
Lyall argues six reforms are essential. First, the Harmonized Sales Tax (HST) rebate on new housing must be made permanent. Temporary programs, he argues, create uncertainty that stalls projects.
Second, DC reductions under the Canada-Ontario Development Charge Reduction Program, currently cutting municipal charges by 30 to 50%, must be enshrined beyond their expiry date.
Third, Ontario should push ahead on building code reform, including allowing single staircases in mid-rise apartment buildings and relaxing outdated restrictions on floor plate sizes.
Fourth, governments must streamline and digitise approval timelines.
Fifth, federal policies, including the mortgage stress test and foreign buyer restrictions — designed for a pandemic-era market that no longer exists should be revisited.
Sixth, land transfer taxes including Toronto's municipal levy should be removed.
Ontario's housing supply targets that are increasingly out of reach demand action on all six fronts at once.
"Housing should not be taxed like alcohol or tobacco as it is a basic economic necessity," Lyall said in a February 2026 RESCON pre-budget submission.
Whether Ontario's new housing affordability measures introduced this year signal a lasting shift or another round of temporary relief may determine the province's affordability trajectory for years to come.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
