A comprehensive report released last week argued that contrary to the popular notion of foreign demand as the prime mover of price growth in Canada’s real estate markets, the dearth of housing supply is primarily to blame.
In its September 23 news release, Fortress Real Developments pointed out that the drastic reduction in the supply of single-detached housing in Canada over the past few years coincided with the acceleration of growth in average home prices across the country.
“Municipalities pushed right against the Greenbelt like Aurora, King City, Richmond Hill, Vaughan and Whitchurch-Stouffville are experiencing a shortage of single-detached homes, and high price growth,” according to the press brief, which was released via Canada NewsWire
“Until recently, the lack of residential unit supply has rarely been discussed as a factor influencing high house prices,” the news release added. “Factors that lead to a decreased housing supply include vehicle transportation and commuting, bodies of water and natural boundaries, obstructive planning policies and disruptive taxes.”
Other possible influences are advocacies preventing the smart usage of more land, Fortress explained.
“Anti-development groups have been successful in reducing housing supply, while driving up the values of their homes.”
Rarely have supply-side aspects like development costs, environmental protection, urban containment, and undue regulation been discussed, according to Fortress senior vice president of market research and analytics Ben Myers.
“For the sake of homeowners and potential home buyers, both demand and supply must be part of any debate going forward by governments looking to improve the short and long term health of the Canadian housing market,” Meyers stated.
The full report can be accessed here
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