Ontario is proposing to temporarily ban three major cities from requiring a certain percentage of affordable units in new buildings near transit stations, citing a downturn in the housing market.

Critics say now is not the time to pull away from affordable housing, but the government argues in its proposal that the policy known as inclusionary zoning works well in a strong housing market. That is not what Ontario is seeing right now.

“Beginning in 2022-23, market conditions in Ontario have undergone a series of shifts that have negatively impacted housing starts and costs, including significant increases in the costs of financing (i.e., interest rates) and construction,” the government writes in its proposal.

“The residential development market continues to be strained and many municipalities considering IZ are finding that is not viable under present economic conditions.”

The pace of building new homes in Ontario has slowed in recent years and has caused the government to back away from its goal of building 1.5 million homes in 10 years.`