Photo: James Bombales

It’s no secret that high demand for housing in the GTA is keeping supply of new construction units low, while prices keep moving up. And according to one expert, Ontario’s growth plan is making matters worse.

“Higher housing prices are a well-known and documented unintended consequence of supply shortages of serviced sites for new housing,” writes Ryerson Centre for Urban Research and Land Development senior researcher Diana Petramala, in a recent blog post. “To minimize these negative effects it is important that ‘shovel-ready’ sites be available to meet the needs of a growing and changing population.”

Currently, Ontario’s growth plan features density targets which favour multi-family housing, with designated urban growth areas dictating what can be built where.

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According to Petramala, the plan fails to encourage developers to build mid-density housing — townhomes, low-rise apartment buildings — instead creating a market with few single-detached homes and many high-rise apartment buildings.

“In Ontario, developers have to contend with the provincial growth plan, and as well as the official plan of whatever municipality they happen to be building in,” Petramala tells BuzzBuzzNews. “In other cities, such as Tokyo, there’s only one plan to work with, and the government incentivizes developers to build the kind of density they want to see in an area, which results in gentler density.”

Petramala says that in order for house prices to be reduced, especially in the coveted single-detached housing market, mid-density development needs to be encouraged.

“To counter undesirable price increases for single-detached houses, the supply of closer substitutes have to be increased considerably,” she writes. “This has not happened over the past decade and is unlikely to happen unless a shovel-ready supply of serviced sites is available to accommodate a surge in construction.”

The promotion of mid-density housing is key, she says, because the current shift towards high-rise apartments isn’t suitable for all buyers.

“For the policy to be effective and moderate undesirable price pressures on single-detached houses, a significant shift from high-rise apartment construction to mid-density housing forms is essential,” she writes.

That sentiment is backed up by a recent survey by the Toronto Region Board of Trade (TRBOT), which found that GTA Millennials want to see fewer one-bedroom condo units built, and more two and three-bedroom apartment buildings.

“I think that particular finding comes from the fact that a lot of Millennials will eventually want to start families, and they’re looking for an affordable option to do that,” TRBOT CEO Janet De Silva told BuzzBuzzNews.

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