At a recent conference hosted by the Association of Municipalities of Ontario, minister of municipal affairs and housing Paul Calandra introduced the new Provincial Planning Statement, addressing Toronto housing market impact. He emphasized that this update provides municipalities with greater tools and flexibility, allowing them to better address their unique local challenges and priorities in housing development.

“This will ensure a consistent planning approach across the province,” Calandra stated. “Municipalities understand local needs best, particularly when it comes to addressing the rapid growth we’re experiencing in Ontario.”

This announcement comes as Ontario struggles to keep pace with its ambitious housing goals. The province is committed to building 1.5 million homes by 2031, but the current rate of construction is falling short. Despite efforts to meet annual targets, including counting long-term care beds in the totals, only a small number of municipalities are on track to meet their goals.

Calandra pointed to external challenges, such as global economic uncertainty and rising interest rates, as factors affecting housing starts. However, he assured that the new planning statement lays the groundwork for a sustained building boom as economic conditions improve.

One notable change in the updated statement is a significant reduction in complexity—trimming the document by 100 pages and 30,000 words. This streamlined approach is designed to make it easier for municipal planners to navigate and apply the rules, particularly in areas designated for housing, industry, and agriculture.

Additionally, the new statement encourages the development of more homes near major transit stations and on underutilized low-density areas, such as shopping plazas and malls. This focus aims to better utilize available land and accommodate the growing population in a more efficient manner.

The province has been consulting with stakeholders for several months on these changes. However, some groups, such as Environmental Defence, have raised concerns that the new planning approach could lead to increased low-density sprawl, which may not align with sustainable development goals.

Toronto housing market impact?

The new Provincial Planning Statement could have several significant impacts on housing in Toronto:

1. Increased Flexibility for Toronto’s Housing Development: With greater autonomy granted to municipalities, Toronto could tailor its housing strategies to better meet local needs. This means more responsive planning to address specific challenges, such as affordability, density, and the demand for various types of housing.
2. Focus on Transit-Oriented Development: The updated statement emphasizes building more homes near major transit stations. For Toronto, this could lead to increased development around transit hubs, making it easier for residents to access public transportation and reducing reliance on cars. This approach could lead to the creation of more vibrant, walkable communities.
3. Utilization of Underused Lands: The push to develop underutilized low-density areas, like shopping plazas and malls, could open up new opportunities for housing in Toronto. This might mean the redevelopment of existing commercial areas into mixed-use developments that include residential units, potentially easing the pressure on housing supply.
4. Streamlined Planning Process: The simplification of the planning rules could speed up the approval process for new housing projects in Toronto. This could help alleviate the housing shortage by getting projects off the ground more quickly, especially as the city strives to meet its share of the province’s 1.5 million homes target.
5. Potential for Low-Density Sprawl: While the statement aims to promote more housing, there’s a concern that it might lead to increased low-density sprawl, even within Toronto. This could have implications for sustainable development, potentially conflicting with the city’s goals of increasing density and reducing environmental impact.

In summary, the new Provincial Planning Statement is likely to accelerate housing development in Toronto, particularly in areas with good transit access and underutilized land. However, the long-term effects on affordability, density, and sustainability will depend on how the city implements these changes and balances growth with its existing urban planning goals.

How will this affect pricing?

The new Provincial Planning Statement could influence housing prices in Toronto in several ways:

1. Increased Supply May Stabilize Prices: By encouraging more housing development, particularly in underutilized areas and near transit hubs, the new planning policies could help increase the supply of homes in Toronto. If the supply of housing rises significantly, it could help stabilize or even lower prices, particularly in areas where demand is high.
2. Development in High-Demand Areas: Building more homes near transit stations and redeveloping commercial areas could increase the value of these properties, making them more desirable. This could lead to higher prices in these newly developed areas, especially if the demand for these locations outweighs the supply.
3. Potential for Higher Land Values: As more land is repurposed for residential use, particularly in low-density commercial areas, the value of this land could increase. Developers may pass these higher costs onto buyers, potentially leading to higher home prices in these newly developed areas.
4. Short-Term Price Increases Due to Demand Outpacing Supply: In the short term, if the pace of construction doesn’t keep up with the growing demand, prices could continue to rise, especially in high-demand areas. This could be exacerbated by external factors such as high interest rates and global economic uncertainty, which might slow the pace of new developments.
5. Potential for Long-Term Price Moderation: Over time, as the market adjusts to the increased supply of housing, prices could stabilize or moderate. However, this depends on the scale of new development and how quickly it can meet the growing demand in Toronto.

In summary, while the Provincial Planning Statement aims to boost housing supply, which could eventually moderate prices, Toronto’s housing market impact will depend on the speed and scale of new developments. In the short term, prices may continue to rise, particularly in high-demand areas, but increased supply over time could help ease these pressures.

What’s the next step?

The next step following the introduction of the new Provincial Planning Statement involves several key actions that will shape its impact on Toronto’s housing market:

1. Municipal Implementation: Toronto’s municipal government will need to integrate the new planning guidelines into its local planning policies and zoning bylaws. This involves revising existing frameworks to align with the province’s directives, particularly around transit-oriented development and the utilization of underused lands.
2. Stakeholder Consultation and Feedback: The city will likely engage with stakeholders, including developers, community groups, and residents, to gather input on how these changes should be implemented. This consultation process can influence how flexible or strict the new policies will be in practice, particularly concerning density and sustainability concerns.
3. Development Proposals and Approvals: As the city adopts the new guidelines, developers will begin proposing projects that take advantage of the updated planning rules. This might include redeveloping shopping plazas into mixed-use areas or building new housing near transit stations. The speed at which these projects move through the approval process will be crucial in determining how quickly new housing comes online.
4. Monitoring and Adjustments: The province and the city will likely monitor the impact of these changes on housing supply and pricing. If the new policies are not leading to the desired outcomes, such as sufficient new housing construction or affordable pricing, further adjustments may be needed. This could involve tweaking zoning regulations, offering incentives for affordable housing, or revising development targets.
5. Public Communication and Education: It’s also important for the city and province to communicate these changes to the public. Homebuyers, homeowners, and investors need to understand how the new rules will affect their property values, housing options, and potential investments. Clear communication will help manage expectations and encourage informed decision-making in the housing market.

The next steps involve Toronto’s integration of the new planning guidelines, active consultation with stakeholders, and the initiation of development projects under the updated rules. The effectiveness of these steps will depend on how well the city balances growth with the need for affordable and sustainable housing options.

In conclusion, this new policy will replace the Provincial Policy Statement, 2020 and A Place to Grow: Growth Plan for the Greater Golden Horseshoe 2019, as amended in 2020, and give municipalities the tools they need to build more homes. Aligning builders and developers with incentives to get more projects off the ground. The vision, laws, policies, and process for land use in Ontario is ready to be put into action and this can be explored through the 2024 Provincial Planning Statement. Here you can Download the PDF of the Provincial Planning Statement.

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