House Price Report Gets the Ball Rolling on Addressing Supply Issues: Home Builders
Ottawa, February 7, 2018 –The Canadian Home Builders’ Association (CHBA) today welcomed the release of a comprehensive new report on escalating house prices. Very importantly, it points to the need to consider more fully the supply-side issues when talking about escalating house prices in Canada’s largest urban centres.
“House prices are of course a function of both supply and demand,” said Kevin Lee, Chief Executive Officer of CHBA. “But the national discussion about housing markets so far has focused most on demand factors: population trends, low interest rates, economic growth and even foreign buyers. This report asks important questions—and starts to give some answers—about the key role of supply, meaning lack of appropriate supply, in price escalation.”
The report, Examining Escalating House Prices in Large Canadian Metropolitan Centres, released by Canada Mortgage and Housing Corporation (CMHC), makes a number of key observations about the availability of land and housing supply:
- Although the availability and price of land and its regulation are critical to understanding housing dynamics in Canada, there is currently a lack of comprehensive data on either.
- Limits on land supply lead to greater house-price volatility and macroeconomic risk.
- Opposition to local redevelopment curtails supply of new homes, ultimately driving up the price of existing homes.
- The cities with the largest price escalations also are often the ones where housing is most regulated – including long approval times and higher compliance costs and fees.
- Price booms tend to be concentrated in regions with inelastic housing supply – the inability of supply to increase in response to price increases.
- Consultations with many municipalities revealed general agreement that the state of housing supply is not well understood.
- There is a need to better understand the underlying factors that limit housing supply in high-priced markets, and support more timely and flexible ways to respond to those challenges.
- The affordability of market-provided homes will be achieved ultimately by across-the-board increases in housing supply.
“In order to address rising house prices and declining affordability, we have to look at housing supply – not just how much, but where and what kind,” Mr. Lee said. “There is a significant gap between the type of housing Canadians want to live in and what’s being allowed to be built—we are seeing a major shortage of family-oriented housing.”
CHBA supports a three-level government action plan, in cooperation with private industry, to address housing supply issues and boost the supply of entry-level and ‘missing middle’ housing – medium-density low-rise in walkable communities with ready access to public transit.
“Getting supply right is critical to meeting the housing aspirations of the next generation,” Mr. Lee concluded.
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Journalists wishing to interview Kevin Lee, Chief Executive Officer of the Canadian Home Builders’ Association are encouraged to submit their request by email or telephone to:
Senior Director, Communications
(613) 230-3060 ext. 232
ABOUT THE CANADIAN HOME BUILDERS' ASSOCIATION
Since 1943, the Canadian Home Builders' Association has been "the voice of Canada's residential construction industry" - one of the most vital and enterprising industries in Canada. Representing more than 8,500 member firms across Canada, CHBA members represent every part of Canada's housing industry - home builders, renovators, land developers, trade contractors, product and material manufacturers, building product suppliers, lending institutions, insurance providers, service professionals and others.
In 2016, the industry supported over 1 million jobs in new home construction, renovation and repair. It remains one of the largest employers in the country, with tens of thousands of business enterprises engaged. One of every 18 workers in Canada is working in residential construction, either directly on site or indirectly by supplying materials, technologies and services. Total wages paid in 2016 were estimated at $59.4 billion. The construction‐related value of new homes, renovations and repairs produced by the industry, including both on‐ and off‐site activities in 2016 exceeded $138 billion.