There’s been a lot of talk about what is needed to help Ontario’s housing market; and everything from job creation to giving a boost to the economy has been suggested in order to do just that. But one CMHC analyst says that we need to stop focusing on the province’s GDP, and stop worrying so much about the amount of jobs found here. Because the only thing that will really help the market is population growth.
“Economic and job growth are not enough,” says Ted Tsiakopoulos. “You need population growth to fuel the housing market.”
And you can certainly see how that’s worked out so far for Alberta. In this Western province, there’s been a surge in both housing prices and housing starts. And with high commodity prices in fuel and oil right now, it can support both of those elements because people continue to flock to the West.
“The population move west will continue in 2013,” says Tsiakopoulos. “The high commodity prices are benefitting resource-rich communities like Alberta.”
And he says, that’s exactly what Ontario has to rely on now. RBC has said that mortgage lending in Ontario will drop to 2 to 4 per cent from the current 5.4 per cent where it sits, and over the next two years. Condo sales in the Toronto area have slowed dramatically, but with overly zealous builders for the past five years, Canada’s largest city is still going to have an overstock on the market of 30,000 units by next year.
But this is the correction we’ve been waiting for, if you ask Tsiakopoulos.
“We have seen a condo correction, especially in Toronto, and fewer housing starts in Ontario,” he says. “Developers are recognizing there are unsold condo units, and they are slowing the new builds. The building community is responding as it should.”
And that, he says, is just one sign that Ontario is recovering and that it will continue to recover. Including its population numbers.
“Economic growth will close the housing gap for the province compared to the Canadian average,” says Tsiakopoulos. “And Ontario will move closer to the growth numbers shown in the West. The economy is showing signs of growth.”
We think it’s a pretty bold statement to say that Ontario is showing the same kinds of population growth as Alberta. Especially considering the vast number of people that make the move out West – particularly when they start in Ontario – year after year. Do you think Ontario’s population growth and economy will be there to support the housing market? Or do you think we’ll need to rely on other factors, such as job growth? Which do you think will have the biggest effect?
