Ontario needs to incentivize the development and preservation of a range of affordable housing options as high housing costs limit buying power and fuel migration out of the province, a business group says.

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In the policy brief released July 5, the Ontario Chamber of Commerce said it is critical to build the right types and mix of housing, including purpose-built rentals, missing middle, student, non-profit, cooperative and supportive housing.

“Housing has reached a crisis point in Ontario,” the report said. “Previously considered an urban issue, housing affordability is now impacting communities of all sizes across the province.”

The report said governments and industry are not aligned on the definition of “affordable housing,” which is generally considered to cost less than 30 per cent of household income before tax.

In an interview, Ontario Chamber of Commerce chief executive Rocco Rossi said the issue of affordability depends on where the individual lives, whether they’re making a six-figure salary and whether they are a recent immigrant or a student. He said people will have different definitions of affordability, and policy needs to reflect this.

As market rates continue to increase due in part to low supply, high demand and rising inflation, housing deemed to be “affordable” is increasingly out of reach for households in need, the report said.

Previously considered an urban issue, housing affordability is now impacting communities of all sizes across the province

Report

Even mid-high income earners are priced out of the real estate market, which leads them to increasingly occupy market rental housing for longer, contributing to low vacancy rates and rising rental rates, it said.

“As Ontarians spend more of their income on housing, they have less available to spend on other goods and services, resulting in wide-ranging implications for the business community and overall economy,” the report said.

It said this significantly impacts the ability of businesses to attract and retain talent, exacerbating ongoing labour shortages, which have gotten worse as net interprovincial migration outflows have hit record levels, partly driven by poor housing affordability.

From a business perspective, the housing crisis is “huge,” Rossi said, adding that having housing that workers can afford is a key part of growing the economy.

“The growing mismatch between housing supply and demand in communities across Ontario has made it more difficult for employers to fill labour gaps, particularly as the global competition for talent heats up,” he said in a press release.

Among its recommendations include inclusive workforce development and immigration strategies to increase the labour pool needed to build more housing.

The Ontario Chamber of Commerce said the provincial government’s commitment to build 1.5 million new homes by 2031 to help mitigate the housing affordability crisis will require an “all-hands-on-deck approach” for private, public and non-profit sectors.

“The reality is that housing below these current rates is not going to be built by the market without considerable assistance from the government,” Rossi said.

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