The factors influencing home values makes for quite the lengthy list, including – but not limited to – supply, demand, location, the economy and development costs. Regulatory incidentals also play into price points, and according to the Building Industry and Land Development Association, they've gotten out of control, particularly in some of Canada's most populated cities.
When including government taxes and fees, the typical newly built house in Toronto goes for about $186,000 more than it would without these expenses tacked on, the BILD revealed in a recent analysis. The same goes for high-rise apartments in the Greater Toronto Area, only to a slightly lesser extent, contributing an average of $121,000 to the list price.
David Wilkes, BILD president and CEO, indicated these add-ons making it extremely difficult for people to enter the market, with the cost of living on a perpetual rise.
"Some of these costs, such as development charges, are increasing far faster than the rate of inflation, squeezing prospective new home buyers out of the market," Wilkes warned.
Average house in Canada goes for $491,000
Buying a residence in Canada doesn't come cheaply, partially due to a substantial shortfall in inventory exacerbated by robust demand. Based on the most recent statistics available from the Canada Real Estate Association, the typical house goes for nearly a half-million dollars. Much of that total derives from the slim-pickings situation in the GTA, as a property runs $383,000 when left out of the national average calculation.
Wilkes believes that if government fees weren't so costly, would-be homeowners may get the opportunity they've been looking for.
"Combined, development charges and [Harmonized Sales Tax] make up nearly 80 percent of all government fees applied to new homes," Wilkes further stated. "With affordability being a significant concern in GTA markets, these types of increases are not sustainable."
BILD urges the government to re-evaluate fees
The BILD doesn't necessarily believe government fees and taxes should be abandoned or that first-time homeowners should be given preferential treatment. However, it does feel like they're being treated unfairly, given fee expenses have risen more than 236 percent tracing back to 2004. That's faster than wages and inflation.
BILD is urging Toronto's lawmakers to take another look at taxes and fees on new development to see how these expenses can be reined in, helping would-be homeowners achieve greater stability.
The government seems to be taking steps toward making homeownership a more realistic financial reality for those who may not have the means or ability. The Canada Mortgage and Housing Corporation indicates it's invested $3.2 billion toward the development of housing for low- or middle-income families. This stimulus is part of Canada's National Housing Strategy, whose charter is to cut homelessness in half by or before 2028.