Is Ontario’s land plan driving housing prices higher?

 

In a column published in the Globe and Mail, Marcy Burchfield, Executive Director of the Neptis Foundation argues against disingenuous suggestions that Ontario's Growth Plan for the Greater Golden Horseshoe is responsible for a shortage of land and rising house prices. Burchfield writes that the argument deflects from the real policy solutions needed to address the pressing problem of housing affordability. It also has the potential to further weaken a provincial policy that is at best a modest attempt to bring a more co-ordinated approach to planning across the Toronto region and address the problems associated with low-density urban sprawl. 

The article can be found here.

In 2015, Ontario embarked on a 10-year review of land-use plans for the Greater Golden Horseshoe region and sought advice on how these plans could be improved.

As the process unfolded, an insistent drumbeat from certain members of the development industry rose to a crescendo, with the often-repeated claim that these plans were the direct cause of rising house prices and of a shortage of developable land for ground-oriented housing across the region. “Land-use regulations part of the affordability crunch,” reads one recent headline, banging the drum yet again.

The drumbeat has now been taken up by a bank, with the release of a CIBC report which claims that policy-driven land shortages are a “significant driver” of today’s housing affordability crisis. It even goes so far as to claim that policies such as “Places to Grow” (the Growth Plan for the Greater Golden Horseshoe) “have limited the availability of serviced land for ground-oriented houses through setting aggressive intensification and density targets.”

The argument is disingenuous and deflects from the real policy solutions needed to address the pressing problem of housing affordability. It also has the potential to further weaken a provincial policy that is at best a modest attempt to bring a more co-ordinated approach to planning across the Toronto region and address the problems associated with low-density urban sprawl.

Those who make this argument by trying to link provincial land use policy, particularly the Growth Plan, to the real issue of housing affordability in the region, tend to obfuscate what they mean by “supply.” The issue demands clarity about the two different types of land supply for growth.

Since 2000, the Neptis Foundation has been studying growth and change in the Toronto region, which accommodates nearly 125,000 new residents each year. Former Ontario premier Mike Harris responded to concerns about congestion and the rapid loss of farmland and green space by creating the Oak Ridges Moraine Conservation Plan and forming the Smart Growth Panel for South-Central Ontario to study the issues. Dalton McGuinty built on the work of the Panel by establishing the Greenbelt Plan and the Growth Plan for the Greater Golden Horseshoe.

Neptis researchers have identified a common confusion over what is meant by “land supply.” The first is the type that planners call “designated greenfield areas.” This is undeveloped land set aside by municipalities for urban expansion. The 2006 Growth Plan required municipalities to plan for population and employment growth to 2031 and allowed for up to 60 per cent of that growth in designated greenfield areas (rather than in already developed areas).

In 2013, research found that in the process of bringing official plans into line with the Growth Plan, municipalities set aside more than 107,000 hectares of designated greenfield land; an area nearly twice the size of the City of Toronto. About half (56,200 hectares) is in the Greater Toronto and Hamilton Area (GTHA).

While some of that land has been built on in the past 10 years, a preliminary update of research shows that about three-quarters remains unbuilt, more than enough to accommodate the hundreds of thousands of ground-related houses planned by municipalities in the GTHA. The Growth Plan requires that greenfield communities be built at a modest density of 50 people and jobs per hectare on average across each county or regional municipality. (To put this standard in perspective, such a density can only cost-effectively support a 30-minute bus service.)

So to say that the Growth Plan – or for that matter the Greenbelt – has somehow created a “shortage of land” is an error.

The second type of land supply is “serviced land” – that is, designated greenfield areas that have municipal water and wastewater pipes and connections to treatment plants in place, and therefore are immediately developable. Little information is publicly available on how much serviced land supply exists. Those who claim that the lack of serviced land is the cause of rising house prices have never presented data to substantiate their argument.

Since the early 1990s, Ontario, under its Provincial Policy Statement, requires municipalities to maintain a three-year supply of serviced land at all times although it does not collect data on this supply. So the claim cannot be proven or refuted. But one thing is certain: the Growth Plan has nothing to do with the supply of serviced land; that is the responsibility of municipalities.

Many factors affect the amount and type of housing units that come onto the market, including when and how builders decide to build and when municipalities negotiate infrastructure and servicing agreements. Both the CIBC report and a 2015 TD Economics report point to hoarding by landowners as one factor that affects prices; in other words, there is land that could be developed, but has not been released to the market. Each institution offers a different solution to the problem: one suggests, paradoxically, adding more land to the existing 107,000 hectares of supply and the other suggests tax incentives to motivate landowners to sell or build.

Our region faces real challenges today, including a housing affordability crisis, road congestion, the loss of prime agricultural land, the need to align infrastructure investments with areas of future population and employment growth, and containing municipal debt used to service low-density sprawl.

An honest debate on policies in the current and proposed amendments to Growth Plan is necessary. However, a strategic dismantling of policies meant to shift unsustainable patterns of development will not benefit the public – only a few landowners who want security for their speculative investments.

Marcy Burchfield is Executive Director of the Neptis Foundation.