The Canadian housing market has seen the average price of a home increase by 28% since the start of the pandemic caused by an undersupply in the market, even in the face of recent declines.
“Ground-oriented” homes, like single family homes and townhomes, have seen a 31% increase in price since March 2020 compared to a 17% increase in the price of apartments, finds a recently published study from the Fraser Institute.
The study concluded that the sharp rise in prices seen in the 2010s and exacerbated at the beginning of the pandemic is because not enough homes are being built to meet the demand by Canadians.
“The reality is simple: Canada is not building enough homes to keep up with population growth or basic demand,” said Steve Lafleur, a senior fellow with the Fraser Institute.
The report found that the number of housing completions has dropped in the 2010s, remaining consistently lower than levels of home building in the 1970s.
Among the housing projects that are being completed, the number of detached homes have decreased, the number of semi-detached and row houses have stayed stagnant, and the proportion of apartment units built have increased.
The disproportionate rise in housing costs between single family homes and apartments have been attributed to the wrong types of homes being built in relation to the market’s demands.
“Not only is Canada experiencing a significant shortage of housing overall…but there also appears to be an important mismatch between the housing types preferred by many Canadians and their families, and the housing types being built,” reads the report.
“The combined number of single-detached, semi-detached, and row housing units completed annually in the 2010s fell to its lowest since the 1960s, when Canada’s population was less than two-thirds as large.”
The study also connects the rise in prices to a growth in the Canadian population, for which the housing market has not been able to meet the demands.
At the height of the housing market’s cost crisis, the average price of a home increased by 50% and over 60% in Ontario in just over two years. While the housing market has cooled off in recent months, the Fraser Institute’s study concludes it is “unclear whether and for how long these price reductions will persist.”
