New homes in Canada are expensive for many reasons, from land costs and labour shortages to financing, materials, and taxes.
But one cost is getting more attention from housing experts: development charges.
According to Canada Mortgage and Housing Corporation, development charges can add $40,000 to more than $100,000 to the cost of a new home in Canada. In some municipalities, these fees can make up 8% to 16% of the total price of a new home.
That matters because development charges do not just affect builders. In many cases, they are passed on to buyers and renters through higher new-home prices and rents.
What Are Development Charges?
Development charges are fees municipalities charge builders when new homes, condos, rentals, or communities are constructed.
The money is usually used to help pay for infrastructure needed to support growth, such as:
- Roads
- Water systems
- Sewer systems
- Parks
- Recreation centres
- Libraries
- Fire services
- Community infrastructure
The idea is that growth should help pay for growth.
But as these charges rise, they can also increase the upfront cost of building housing.
CMHC Says These Fees Can Add Tens of Thousands to New Homes
CMHC’s June 2026 Housing Observer explainer says development charges can add $40,000 to more than $100,000 to the price of a new home in Canada.
In some municipalities, CMHC says these fees can represent 8% to 16% of the total home price.
That is a major cost in a housing market where affordability is already stretched.
For a buyer purchasing a new condo, townhouse, or detached home, these fees may not appear as a separate line item. But they can still be built into the final purchase price.
Ontario and the GTA Stand Out
Development charges vary widely across Canada, but CMHC says the differences are especially noticeable in Ontario and the Greater Toronto Area.
According to CMHC’s development charge data:
- Two-bedroom apartment charges can range from about $40,000 in Ottawa to about $122,000 in Markham
- Single-detached home charges can range from about $125,000 in Pickering to more than $180,000 in Toronto
These are major differences, and they can influence where developers choose to build.
If charges are too high, some projects may no longer make financial sense.
High Charges Can Affect Housing Supply
CMHC says high development charges can reduce housing supply when projects become financially unviable.
That is especially important right now because Canada is already struggling to build enough homes.
A project that looks possible on paper can become too expensive once land, labour, financing, construction costs, taxes, and municipal charges are included.
This is especially true for projects that need to be financially viable before construction starts, such as condos and purpose-built rentals.
If the numbers do not work, builders may delay, redesign, or cancel projects.
Reducing Charges Could Help Some Projects Move Forward
CMHC’s newer analysis found that reducing or eliminating development charges could increase the number of viable housing projects by up to 14% in some cities.
That means lower fees could help unlock some projects that are currently sitting on the edge of financial viability.
For a market like Ontario, where new construction has slowed and condo pre-construction sales remain weak, that could matter.
Lowering upfront costs could make it easier for some projects to move ahead, especially multi-unit housing.
But CMHC Says It Is Not a Cure-All
CMHC is also clear that cutting development charges alone will not fix Canada’s housing crisis.
Development charges are only one part of the cost of housing.
Other major issues include:
- High land prices
- Construction costs
- Interest rates
- Labour shortages
- Slow approval timelines
- Financing challenges
- Weak pre-construction sales
- Infrastructure capacity
- Zoning and planning rules
Reducing development charges may help improve project viability, but it will not automatically make homes affordable.
Cities Rely on This Money
Another challenge is that municipalities rely heavily on development charges to fund local infrastructure.
If development charges are reduced or eliminated, cities may need to replace that revenue somehow.
That could mean more funding from other levels of government, higher property taxes, new infrastructure funding models, or different ways to pay for growth.
This is why the debate is complicated.
Lower fees could help housing supply, but municipalities still need money to build the infrastructure that new communities require.
June 15 Update: Ontario and Canada Are Moving on Development Charge Reductions
This issue is becoming more timely.
In June 2026, the Ontario and federal governments opened applications for a new development charge reduction program aimed at lowering upfront costs and helping more housing get built.
The program is connected to efforts to reduce development charges and support infrastructure in growing communities.
For Ontario, this could become a major housing policy story because development charges have become one of the biggest cost debates in the new-home market.
Why This Matters for Buyers
For buyers, development charges help explain why new homes can feel so expensive.
Even if buyers do not see the charge directly, the cost can be included in the final price of a new home.
That means higher charges can contribute to:
- Higher new-build prices
- Higher condo prices
- Higher townhouse prices
- Higher carrying costs
- Higher required down payments
- Less affordability for first-time buyers
In expensive markets like the GTA, every added cost matters.
Why This Matters for Renters
Development charges also affect renters.
If higher charges make rental projects more expensive to build, developers may need higher rents to make projects financially viable.
In some cases, projects may not get built at all.
That matters because Canada needs more purpose-built rental housing, especially in high-growth cities.
If development fees make rental housing harder to build, renters may face fewer options and more pressure over time.
What This Signals for Canada’s Housing Market
The development charge debate highlights one of Canada’s biggest housing challenges.
Governments want more homes built, but the cost of building housing remains very high.
For Canada’s housing market, this suggests:
- New homes may remain expensive
- Builders may continue facing project viability issues
- Municipal funding models may need reform
- Reducing fees could help some projects move forward
- Development charges are now a major affordability issue
The key takeaway is that Canada’s housing crisis is not only about demand.
It is also about the cost of getting new homes built.
What This Signals for Ontario
Ontario is at the centre of this issue.
The province has high home prices, major infrastructure needs, and some of the largest development charges in the country.
In the GTA, where many new homes already cost far more than the average household can afford, development charges can add another major cost layer.
If Ontario wants to improve affordability, it may need to look not only at how many homes are approved, but also at whether those homes are financially realistic to build.
Development charges may not be the entire problem.
But they are clearly part of the affordability equation.
References
Canada Mortgage and Housing Corporation. (2026, June 3). CMHC’s Ask an Expert discusses development charges in Canada.
https://www.cmhc-schl.gc.ca/en/observer/2026/development-charges-new-homes-expensive-canada
Canada Mortgage and Housing Corporation. (2026). Development charges: cities aren’t created equally.
https://www.cmhc-schl.gc.ca/en/observer/2026/development-charges-not-all-cities-are-created-equally
Canada Mortgage and Housing Corporation. (2025, December 4). We built this city on development charges.
https://www.cmhc-schl.gc.ca/observer/2025/we-built-this-city-development-charges
Canada Mortgage and Housing Corporation. (2025, December 4). Development charges: Who bears the cost?
https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/research-reports/accelerate-supply/development-charges-who-bears-cost
Canada Mortgage and Housing Corporation. (2026). Development Charges Data Tables.
https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-data/data-tables/housing-market-data/development-charges
Government of Ontario. (2026, June 13). Ontario and Canada open applications for new Development Charge Reduction Program.
https://news.ontario.ca/en/release/1007531/ontario_and_canada_open_applications_for_new_development_charge_reduction_program
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