Foreign buyers are a “red-herring” in Canada’s hot housing market and provincial and municipal governments need to cut red tape to boost the supply of new homes and help balance red-hot housing markets, says an executive with Canada’s largest home builder.

“There is a huge red tape problem,” Brian Johnston, Chief Operating Officer, Mattamy Homes tells BNN. “Red tape is a hurdle we have to jump over but it drives up the price of housing.”

The lack of new housing supply is driving up prices and making housing unaffordable to many buyers in hot markets like Toronto and Vancouver, says Johnston. But builders can’t keep up with demand because it often takes too long to get new projects approved, he tells BNN.

It can take dozens of submissions to some municipalities to get a project off the drawing board, says Johnston. “There are some municipalities that are very pro-growth and some that are anti-growth,” he says. “Even pro-growth municipalities have an enormously difficult time getting stuff through the planning process.”

Developers are also stymied by regulations regarding density, infrastructure such as was water, roads and sewers – much of which is mandated by the province. “I don’t blame the municipalities per se, I blame the province,” he says. “Most of the tools in their toolbox are drawn from provincial housing policy.

Johnston says concerns that foreign buyers are driving prices higher are a “red-herring.” Immigration has been a factor in the real estate markets for decades and investment in housing is fairly immobile, he says. “It’s not like they are buying stock in a Canadian bank that they can sell and leave the country.”