Higher Taxes or More Homeownership? Who Should Pay for Growth in the GTA

Every new home in the GTA pays for growth twice. Once at the door, through development charges folded into the price. Then every year after, through property tax. For two decades, GTA cities have leaned hard on the first bill and kept the second one low.

That choice now sits at the centre of the housing debate. Ottawa and Ontario are paying cities to cut development charges, and voters pick mayors and councils on October 26. The question underneath it all is simple to state and hard to answer: should the next generation of buyers keep paying for growth up front, or should everyone who already owns a home pay a little more each year?

The numbers below make the trade-off visible, city by city.

The bill at the door

Development charges are one-time fees a city and region collect on each new home to pay for roads, transit, water and sewer pipes, parks and other services that growth needs. The builder pays them, and in a normal market most of the cost ends up in the price.

CMHC published the first national comparison in December 2025. The GTA is in a different league from the rest of the country.

Development charges per unit, 2025, before the 2026 cuts. Source: CMHC, December 2025.

CMHC put the charges at 8.5 per cent of the average new single-detached price in Toronto and 15.7 per cent of the average new condo price in Markham. A Toronto house carries six times the charge of the same house in Montreal.

The bill every year

Now look at the other bill. The GTA’s largest cities have some of the lowest residential property tax rates in Ontario.

Tax rates from our 2026 GTA property tax rates table. Last column divides CMHC’s 2025 detached charge by the yearly tax. Our calculation.

The pattern is hard to miss. In Markham and Toronto, the buyer of a new house paid, at the door, roughly what a comparable owner pays in property tax over three decades. In Pickering, the gap is closer to twelve years. The lowest-tax cities are the ones charging new buyers the most up front.

Halton shows the scale from the city’s side. The region collected $384 million in development charges in 2024 against $1.236 billion in property tax, according to a July 2026 C.D. Howe Institute review. Growth charges were worth almost a third of the entire property tax take.

What $180,600 costs the person who pays it

A charge built into a home’s price does not stay $180,600. Most buyers borrow it.

• Added to a 25-year mortgage at 4.5 per cent, $180,600 costs about $1,000 a month, or roughly $300,000 over the life of the loan.
• Toronto’s 2026 cut on a detached house, $82,708, works out to about $458 a month on the same terms.
• A higher price also means a bigger minimum down payment. HST is charged on the full price of a new home, including the share that went to the city. Land transfer tax is charged on it too.

Those figures assume the full charge is passed through to the buyer, which is roughly what most research finds in strong markets. In a slow market like this one, builders and landowners absorb more of it.

What the same money costs if everyone shares it

Spread across every property, the arithmetic looks very different.

• The C.D. Howe review estimates that if Ontario municipalities had borrowed the $2.77 billion in development charges they collected in 2023, over 30 years at 4.5 per cent, property taxes would rise by about half a per cent on average across the province. If they did it every year, the increase would build to about 15 per cent over 30 years.
• In Halton, where charges are heavier, the same approach would add about 2 per cent to property taxes.
• For scale, Toronto’s 2.2 per cent increase in 2026 added about $91.53 to the average home’s bill. Each 1 per cent is about $42 a year.

One side of the ledger is a young family carrying $1,000 a month for 25 years. The other is an established owner paying a few dollars more a month. That is the trade-off in its plainest form.

Meanwhile, ownership is slipping

Ontario’s homeownership rate was 68.4 per cent in the 2021 census. The Toronto metropolitan area was lower, at 65.1 per cent, and the trend inside the GTA points down.

Sources: Statistics Canada, 2021 Census; City of Toronto 2021 Census backgrounder; Vaughan Business Enterprise Centre (shares calculated from household counts).

The drop is sharpest where you would expect it. In Brampton, ownership among households aged 40 and over barely moved between 2016 and 2021. Among 25 to 39 year olds, it fell more than six points in five years. Those are the people who buy new homes, and the people who pay development charges.

Building has slowed too. Toronto recorded 4,557 housing starts in the first half of 2026, down from 10,372 in the first half of 2024 and 12,475 in the first half of 2023, according to a city report to council. A 50 per cent charge on a home that never gets built raises nothing.

The case for keeping charges high

There are serious arguments on the other side, and they deserve a fair hearing.

• Growth should pay for growth. People who already live in a city did not ask for a new subdivision. Asking them to fund its pipes and roads is its own kind of unfairness.
• The cut may not reach buyers. Nothing in the federal-provincial program forces builders to lower prices. In a hot market, a cut can end up in land values and margins.
• The infrastructure still has to be built. Peel Region paused new growth-related water and wastewater contracts in May 2026, citing a funding shortfall. Cheaper homes with no sewer connection are not homes.
• Property tax hikes hurt people too. Owners on fixed incomes feel every increase. And 48 per cent of Toronto households rent. Landlords pass property tax on through rent.

These points are why most critics of development charges, including the C.D. Howe review, argue for phasing them down gradually, with cities borrowing for growth and repaying through property tax and water rates, rather than scrapping them overnight.

The counterintuitive part

Here is the idea that changes how the whole debate looks. Higher property taxes can make homes easier to buy.

Economists Joshua Coven, Sebastian Golder, Arpit Gupta and Abdoulaye Ndiaye studied this in a 2024 paper published through CEPR and featured by the Federal Reserve Bank of Minneapolis. Their reasoning: buyers price future taxes into what they will pay today. A higher yearly tax means a lower purchase price, a smaller down payment and a smaller mortgage. That helps young buyers whose income can handle a yearly bill but who cannot save a large down payment. Higher carrying costs also nudge older owners in big homes to downsize, which frees up family-sized houses.

In their model, raising California’s property tax rate from about 0.8 per cent to Texas’s 2 per cent cut home prices by 18 per cent and raised homeownership among 25 to 44 year olds by 7.4 per cent. One of the authors called the property tax a “forced mortgage.”

It is an American model, and the authors are clear that existing older owners lose in any transition. But the logic applies here with extra force. A development charge is the opposite of a forced mortgage. It is a lump sum charged to the newest, youngest and most stretched buyers, and then financed at mortgage rates for 25 years.

So which should it be?

Growth costs money either way. The real choice is who carries it, and when.

• Development charges put the cost on new buyers and renters in new buildings, at the moment they have the least cash and the most debt.
• Property tax spreads it across every owner, including those who bought years ago and have gained the most from rising prices, paid in small amounts over decades.
• Senior government funding, like the $8.8 billion Canada-Ontario program, adds a third payer: income taxpayers across the province and the country.

Toronto, Mississauga and Vaughan have now taken federal and provincial money to cut their charges. Brampton and Burlington have applied. Markham, Oakville and Milton have not announced cuts. Our tracker shows where every GTA city stands on development charge cuts.

A city that cuts development charges and then holds property tax flat has not made a choice. It has delayed one. The money for the next water main has to come from somewhere.

Questions to ask before you vote on October 26

• If you cut or hold development charges, how will you pay for the pipes, roads and transit new homes need?
• Would you raise property tax to do it? By how much?
• Will you borrow for growth infrastructure and repay it over 30 years, as other cities do?
• When the federal and provincial money ends, will the charges go back up?

See where GTA mayoral candidates stand on housing.

What this means if you are buying

If you are buying a new home, ask the builder whether the price reflects the 2026 cut, and whether development charges are capped in your agreement. Our list of pre-construction closing costs in Ontario shows where these charges hide.

If you are buying a resale home, the city’s tax rate matters for the long run. A lower rate in Markham or Toronto keeps your yearly bill down, but it also means those cities lean harder on charges and on future increases. Check your city’s numbers with the GTA property tax rates table, and compare prices on our GTA market data page.

Questions about development charges and property tax

Who pays development charges in Ontario?

Builders pay them to the city and region, usually when they get a building permit or, under newer rules, at occupancy. Most research finds that buyers and renters bear most of the cost through higher prices and rents, especially in strong markets.

Would cutting development charges raise my property tax?

It can. A city that collects less from development has to cover growth costs from another source: senior government funding, borrowing repaid through property tax, water rates, or delays to infrastructure. One estimate puts the cost of replacing one year of Ontario’s development charges with 30-year borrowing at about half a per cent on property tax bills.

Which GTA cities have the highest development charges?

In CMHC’s 2025 data, Toronto and Markham had the highest charges on a single-detached home, at about $180,000 each, followed by Brampton at $154,655. Toronto’s charges have since been cut under the 2026 program.

Do higher property taxes lower home prices?

Research suggests they do. Buyers factor future taxes into what they will pay. A 2024 study by Coven, Golder, Gupta and Ndiaye estimated that raising property tax rates from California to Texas levels would lower prices by 18 per cent in their model.

Sources

• CMHC, “We built this city: development charges,” Mathieu Laberge, December 4, 2025.
• C.D. Howe Institute, “Growing Pains: Rethinking Development Charges in Canadian Municipalities,” Andrew Sancton, July 21, 2026.
• Coven, Golder, Gupta and Ndiaye, “Property Taxes and Housing Allocation Under Financial Constraints,” CEPR Discussion Paper DP19230, 2024; Federal Reserve Bank of Minneapolis, November 14, 2024.
• Statistics Canada, 2021 Census of Population, Focus on Geography Series; City of Toronto, 2021 Census Backgrounder: Housing; Vaughan Business Enterprise Centre, 2021 Census housing characteristics.
• City of Toronto, council report on the implementation of the Development Charges Reduction Program, 2026.
• CP24, Toronto 2026 budget coverage, January 2026.
• Local Toronto, 2026 GTA property tax rates and development charge tracker.

This article is for information only and is not tax, legal or financial advice. Tax rates and development charges change often; confirm current figures with your city and your lawyer. HomeLife Landmark Realty Inc., Brokerage.