Approval rate of new homes skyrockets at city hall, but developers want more

The number of new homes approved for construction by London city council so far this year is through the roof, nearly doubling the total from all of 2023 in just seven months, new city hall figures show.

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But while the trend is in the right direction, more needs to be done if the city wants to hit its target of building 47,000 new homes by 2031, the head of an umbrella group for local developers says.

The figures in a city staff report going to council’s planning committee show the sharp uptick:

• 2024: 10,398 new housing units approved as of July 23
• 2023: 5,337 new housing units approved in the entire year
• 2022: 4,430 new housing units approved in the entire year

The staff report doesn’t specify the housing types approved so far this year, for example whether they’re single-family homes or apartments.

Though the approval figures are good news for a city facing a housing crisis, those numbers also have to be taken with “a grain of salt” given that building applications still need to go through several hurdles before a building permit is actually issued, said Mike Wallace, executive director of the London Development Institute.

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“Getting your planning approval. . . doesn’t mean that those units will be built in the near future,” he said. “These applications have probably been in the system four or five years, maybe longer, to get to the point where they can get an approval.”

Wallace said he prefers to focus on actual building permits issued by the city to gauge the state of the industry, noting they provide a better reflection of projects either shovel-ready or already under construction.

But even those numbers have gone up significantly in 2024.

According to the staff report, city hall had issued building permits for 2,251 units as of June. That’s an increase of 228 per cent over 2023’s 686 permits issued by the same time last year.

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Several issues have impacted the pace of new builds, not only in London but across the country, in recent months.

One of them is higher interest rates, which have brought down demand for homes while making it more expensive for developers, already dealing with higher costs for materials due to inflation, to build new projects. In April, for instance, the Canada Mortgage and Housing Corp. (CMHC) reported housing starts in Ontario that month were down 37 per cent from the same month last year.

But locally, another element impacting new construction is the pace at which projects are approved by city hall, said Wallace, who added the group he represents continues to work with city staff to streamline its process.

Deputy Mayor Shawn Lewis agreed city hall can do a better job at getting building permits “out the door a little faster.”

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“There’s still some process improvements we can make on the building side but, in general, I’m pretty encouraged by the numbers we’re seeing,” he said. “We’re doing our very best here, but there are significant factors that are outside of our control.”

News that the Bank of Canada, which this year already has eased its key lending rate twice, is moving away from concerns about high inflation and more toward worries about a slowing economy could give the housing industry an important boost, analysts believe.

While currently lagging behind its goal, Lewis also said the city is “tracking in the right direction” to hit its housing target of building 47,000 new homes in the coming years.

But he also said the city will need more support, especially from the federal government, to make a dent in the housing crunch, which has resulted in rents and home prices ballooning in recent few years.

“We’re still seeing a population growth that’s outpacing our housing starts and that’s a big concern,” Lewis said. “If we hit 47,000 new homes but the need actually ends up being 57,000, well, then we still have a housing problem.”

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