Canada’s housing file has already been under pressure from rates, construction costs and zoning. Now new numbers from Canada Mortgage and Housing Corporation (CMHC) put a sharper price tag on another piece of the puzzle – the development charges that cities levied on every new unit.
The federal housing agency’s latest data set, drawn from 30 municipalities in Ontario, British Columbia, Alberta and Quebec, showed those fees accounted for a material share of new-home prices and varied widely from one market to another.
In Ontario alone, CMHC found development charges could represent 8 to 16% of a new condo price and up to 9% of the cost of a single-detached home in Toronto.
“New data collected by CMHC shows development charges account for a significant part of the cost of a new housing unit in some cities,” said Mathieu Laberge, CMHC’s chief economist and senior vice-president of housing insights.
"Charges vary greatly across the country both in their magnitude and on how they are charged."
He added that “understanding development charges is key to understanding housing supply and affordability across Canada. They shape both the cost of housing and the pace at which communities can grow, while being an important funding source for a broad range of municipal infrastructure.”
For a two-bedroom apartment, CMHC’s pilot data showed per-unit charges of about $39,600 in Ottawa and $121,500 in Markham, equal to 8.2% and 15.7% of average new condo prices in those markets.
In the Greater Toronto Area, charges on a single-detached home ranged from roughly $125,000 in Pickering to about $180,600 in Toronto, or close to 9% of the average absorbed price, CMHC found.
Municipal revenue needs vs affordability goals
Builders and brokers push back on cumulative “cost‑to‑build” pressures. Rising land, labour and material costs in Ontario have been “compounded by high municipal development charges,” contributing to stalled projects and weaker housing starts.
Industry groups also warn homebuyers are “still bearing the burden of soaring development fees,” with the Ontario Real Estate Association estimating that on average, development charges could add “up to $135,000 to the cost of a new home” in some markets.
The association has proposed alternative models for funding growth. One idea is to let municipalities treat water and wastewater services similarly to energy services – amortized across the broader user base, rather than front-loaded into development charges.
The group is calling for pro-housing policies that meet municipalities' infrastructure needs without pushing costs onto future homeowners. It also encourages the government of Ontario to implement solutions that help “get shovels in the ground.”
CMP
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