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Builders have cut prices to the bone in a desperate attempt to spur the new housing market.

Yet, starts and sales continue to decline, and industry employment remains on a downward spiral.

It is patently obvious the current situation is unsustainable. Something has clearly got to give. If the current trend continues, the industry will be devastated and our economy will tank.

To move the needle and tackle the housing crisis, the cost of construction must be reduced.

That means lowering the stack of taxes and fees that add tens and even hundreds of thousands of dollars to the price of a new home – and push them out of reach of the next generation.

Governments can get the ball rolling by eliminating both the federal and provincial sales taxes on new homes, not just for first-time buyers as the feds have done but for all purchasers. Such a policy would take a significant chunk off the cost of a new home purchase.

The federal government has announced a break for first-time buyers who account for roughly 39 per cent of the market, according to Tarion, Ontario’s new home warranty program. The feds have agreed to cut the five-per-cent sales tax for first-time buyers retroactive to May 27. Presently, the feds are working out the regulations to make this happen.

The federal government is to be commended for taking action. But it is unfortunate the Ontario government is not doing the same. At first, the Doug Ford government indicated it would take steps similar to what the feds have done, but the administration has since backpedaled on the commitment.

In light of the dire situation, not only should the province commit to sales tax relief for first-time buyers, but both the feds and province should pledge to provide such relief to all buyers of new homes. Cutting the federal and provincial sales taxes on all new homes would bring down costs and lead to more housing. On a $1-million new home, for example, buyers would save $130,000.

Sales of new housing have reached historic lows. Taxes, fees and levies are killing the market, accounting for roughly 36 per cent of the purchase price of a new home. Action is needed.

A report commissioned by RESCON recently looked at sales and starts in 34 municipalities in the Greater Toronto Area and Greater Golden Horseshoe (GGH) region. The findings were alarming.

In the first six months of this year, housing starts were down an average of 40 per cent in the 34 municipalities. Condo apartment starts over the first six months were down 54 per cent relative to 2021-24.

In Toronto, starts in the first six months of 2025 were down 58 per cent and sales declined 91 per cent compared to the same period between 2021-24, while industry employment fell by 10,209 jobs.

Industry employment is also affected.

The reduction in housing starts in the municipalities over the first six months of 2025, relative to 2021-24 averages, translates into 24,195 fewer person-years of employment.

The report indicated most municipalities in the GGH, including the City of Toronto, received a failing grade.

Disturbingly, of the 34 municipalities that were graded, 22 received an F, another five received a D, and the other seven municipalities received a C or higher. Municipalities were graded on their performance against provincial housing targets.

The findings should set off alarm bells for policy-makers across all three levels of government.

Projects are being shelved and the outlook for the residential sector is bleak.

The slowdown has already reduced employment in the residential construction industry by 25,000 jobs in the first half of 2025. Job losses could exceed 50,000 just by year’s end, if the present pace continues.

Cutting the sales taxes, however, would trigger more housing, thereby creating thousands of additional construction jobs. Such action would also boost demand for more steel and lumber.

RESCON has repeatedly raised the issues of the tax burden on new housing, but it remains a perennial problem.

Governments must take concrete action to lower taxes and kick-start the industry. If we fail to act, the consequences will extend beyond the industry to our entire economy.

The federal government has pledged to build 500,000 units in each of the next 10 years and the Ontario government has promised 1.5 million homes between 2023 and 2031. Unfortunately, the trend continues to head in the wrong direction. Both goals seem like long shots.

Governments have never been quick on the draw when it comes to lowering taxes. But it is time for that to change. The residential construction industry – and our economy – depend on it.

Richard Lyall is president of the Residential °µÍø½ûÇøion Council of Ontario. He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.ÌýÌýÌýÌý