Housing Crisis, Inclusionary Zoning & Housing Supply
What It Means for London, Ontario Real Estate
Ontario’s housing crisis isn’t new, but the policy debate about how to fix it is evolving quickly.
A recent commentary in Real Estate Magazine highlighted growing concern in Ontario’s homebuilding sector that inclusionary zoning requirements, which require developers to include below-market units in new projects, may be unintentionally stalling housing supply.
The provincial government has proposed suspending inclusionary zoning requirements in Toronto, Mississauga, and Kitchener until at least 2027. Although London is not currently at the centre of that policy shift, the conversation matters here.
At Elevate Real Estate Group, we believe that any housing policy, whether in the GTA, Kitchener-Waterloo, or Southwestern Ontario, ultimately affects housing supply, home prices, development viability, and long-term affordability in London.
Let’s unpack what this means locally.
The Core Issue: Supply vs. Viability
Inclusionary zoning sounds straightforward: require developers to include a percentage of affordable units in larger residential projects, particularly near transit.
The challenge, according to many in the building industry, is economic viability.
In today’s market, residential development in Ontario is already encountering:
- Elevated construction costs
- High development charges
- Increasing municipal fees and levies
- Lengthy approval timelines
- Higher borrowing costs
- Softer buyer confidence
When affordable-unit mandates are layered on top of those pressures, some projects simply don’t proceed. And when projects don’t move forward, no units, affordable or market, are built.
What This Means for the London, Ontario Housing Market
London has historically benefited from being slightly more affordable than the GTA while maintaining strong economic fundamentals. However, we are not immune to the same pressures:
- Development charges have risen.
- Approval timelines can stretch.
- Builders are navigating tighter margins.
- Construction employment has softened.
- Single-family housing starts are at decade lows.
Inclusionary zoning has not been implemented in London at the scale seen in Toronto, but the broader policy environment affects builder confidence across the province. When projects pause in major markets, capital and risk appetite shift.
Elevates view: “Affordability isn’t created by policy language alone; it’s created when projects are actually built.”
Why Supply Matters in London
Over the past five years, London, Ontario, has experienced:
- Rapid population growth
- Increased rental demand
- Significant upward pressure on detached home prices
- Growth in apartment and condo development
However, we are now in a period of economic uncertainty, with slower employment growth and more cautious buyers. If new housing supply slows further, whether due to financing, development viability, or policy complexity, inventory may tighten again once confidence returns. When inventory tightens in a growing regional hub, prices typically stabilize or rise.
Multiplex Housing: A More Practical Path?
One of the more constructive elements of the current conversation is the focus on small-scale multiplex housing: triplexes, fourplexes, and gentle density within established neighbourhoods.
In London, this approach has real relevance.
Neighbourhoods near:
- Downtown London
- Wortley Village
- Old North
- SoHo
- Hamilton Road
- Transit corridors
already have infrastructure and servicing capacity.
Small-scale intensification:
- Uses existing lots
- Preserves neighbourhood character
- Avoids massive high-rise infrastructure costs
- Increases rental supply gradually
- Supports “missing middle housing.”
As we’ve told clients, exploring infill or conversion projects:
“Smart density isn’t about overbuilding; it’s about unlocking what’s already viable.”
Programs such as CMHC’s MLI Select and other financing tools can support energy efficiency, accessibility, and long-term rental stability without requiring policies that make projects financially infeasible.
For London Home Buyers
Policy uncertainty often slows development activity.
If housing starts decline further in Southwestern Ontario, future inventory could become constrained again once:
- Interest rates stabilize
- Employment rebounds
- Population growth resumes
- Major industrial projects (like EV battery investments in St. Thomas) reach full operation
For buyers, this means today’s more balanced market may not last indefinitely.
Balanced markets reward preparation.
For London Home Sellers
A slowdown in large-scale development can have mixed effects.
Short-term:
- Softer economic sentiment can temper buyer confidence.
Long-term:
- Constrained housing supply can support price stability.
Established neighbourhoods in London with strong schools, access to hospitals, and proximity to employment centres remain fundamentally attractive.
The Bigger Picture: Affordability Requires Both Policy and Math
There is broad agreement across the political spectrum that Ontario needs more affordable housing. The debate is about how to get there.
If development charges make up a significant share of new home costs…
lass=”yoast-text-mark” />>If approval timelines delay projects for years…
>If construction costs remain elevated…
>If financing conditions are tight…
Then, layering additional mandatory costs onto projects may reduce overall supply rather than increase affordability. That doesn’t mean affordability should be abandoned.
It means housing policy must align with construction economics.
Our View at Elevate Real Estate Group
London’s housing market sits at an important intersection:
- Regional economic volatility
- Major long-term industrial investment
- Slower short-term job growth
- Continued need for rental supply
- Infrastructure expansion
- Moderate but stabilizing home prices
Inclusionary zoning debates in larger markets signal a broader provincial recalibration toward restoring building viability.
Whether buying, selling, or investing in London real estate, the key themes remain:
- Monitor supply levels.
- Watch housing start data.
- Understand neighbourhood-specific inventory.
- Think beyond headlines.
If you’re considering:
- Selling your home in London, Ontario
- Purchasing in a shifting market
- Exploring duplex or multiplex conversion
- Investing in rental property
We’re happy to provide detailed, local market analysis.
Because in every policy cycle, as in every housing cycle, opportunity belongs to those who understand both the economics and the neighbourhoods.
Elevate Real Estate Group
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