PBO Report Notes Canada Has Housing Affordability Issue… 7 Years into Housing Crisis
Better late than never, we suppose.
The Parliamentary Budget Office is late to the party again, this time showing up with a half-empty case of beer and a bombshell report stating the average house in most Canadian cities is, uh, unaffordable.
In other news, the sun will rise tomorrow morning.
The report, a marvel of sleuthing if there ever was one, says the average Canadian house price increased by 97% between 2015 and 2021 — which, incidentally, is how long Justin Trudeau’s Liberals have been governing Canada, not that the PBO’s report drew any sort of connection there — vastly outpacing wage growth and stretching debt service ratios thin.
A slew of recommendations to improve housing affordability have been made in recent months, but more often than not, as is the case with first-time homebuyer incentives, they broaden demand without addressing supply scarcity, thereby driving prices up even further.
The Ontario government just announced its Housing Affordability Task Force, and while ambitious, most of its recommendations, particularly those pertaining to municipal zoning, are sound. But given recent provincial and federal governments’ track records on solving the housing affordability issue, there’s good reason to be circumspect that the Housing Affordability Task Force’s ambitions will be realized.
Through the Canada Mortgage and Housing Corporation the federal government plans on reviewing down payment structures to occlude real estate speculators and large investors from snapping up so much precious housing stock.
The PBO’s report noted that, going back to 2015, housing prices now are at least 30% higher than affordable levels in Toronto, Vancouver, Montreal, Victoria, Halifax, Hamilton and Ottawa. In some cases, they’re more than 50% higher than affordable levels.
The PBO expects home prices to moderate once the Bank of Canada begins its interest rate-hiking regime which, by most estimates, will be next next month, as it will remove some prospective buyers from the housing market. But with a rapidly growing population, which could worsen rental affordability in major cities, there will be plenty more people to take their place.
Neil has covered housing and real estate for a number of years as a Toronto-based journalist. Before joining STOREYS, he was a regular contributor for the Toronto Star, Toronto Sun, National Post, Vice, Canadian Real Estate Wealth, and several other publications. Have a real estate story? Email him at [email protected]