In this week’s EconMinute, we’re talking about Canada’s Housing Shortage.
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Canada is in a housing crisis characterized by soaring prices without the income growth to match. On average, home prices have increased nearly 65% faster than incomes since 2005. As a result, homeownership is quickly moving out of reach for many Canadians.
This crisis has come to the forefront of public discussion over the last year as buyers flocked to, and were subsequently priced out of, an over-heated market. The pandemic created conditions contributing to the surging demand and price accelerations, including pent-up savings and record-low interest rates.
However, the pandemic didn’t cause this crisis; it only exacerbated the issue. Canadian real estate has been in crisis for over a decade. And one of the biggest contributory causes is the structural housing shortage.
For years there has been a substantial insufficiency of housing supply to meet demand. In fact, Canada has the lowest housing stock per capita in the G7, with 440 dwellings per 1,000 residents compared to the G7 average of 480 dwellings per 1,000 residents.
Here’s what the data shows for Alberta:
- Alberta has the lowest per-capita housing supply in the country, falling well below the Canadian average.
- To have the same level of per-capita housing as the Canadian average, over 103,000 additional housing units would be required; to reach the G7 average, an additional 273,000 units would be required.
- Since 2016, Alberta’s population has grown 4.8%, while the housing supply grew by 7.2%, indicating that we have made some gains on our housing shortfall.
- These gains are primarily attributed to significantly lower population growth than in previous census periods, driven by negative net migration.