University of Guelph-Humber

People across Canada, especially young people, are feeling the housing crunch. It's increasingly difficult to buy or even rent a property in major cities. But what's causing this problem and how can we fix it?

To discuss these and other questions, Dr. Anjum Siddiqui, a former business professor at the University of Guelph-Humber from 2010-2011 and a professor of economics and finance at Sulaiman Alrajhi University in Saudi Arabia, visited a class of University of Guelph-Humber business students this week. During his lecture, Dr. Siddiqui provided crucial insights about the current state of the housing market in Canada and what we can do to prevent this crisis from escalating.

1. The Housing Crisis was Brewing Before COVID-19

Dr. Siddiqui emphasized that the housing crisis predates the COVID-19 pandemic, with low interest rates playing a crucial role in making the situation worse.

"Housing prices had started to increase before [COVID-19], and the increase in the housing prices at that time was attributed to a low interest rate environment, which made it possible for people to purchase bigger homes which they could not have afforded otherwise,” Dr. Siddiqui said.

2. Canadians' Financial Health is a Concern

In the realm of real estate, the financial well-being of Canadians plays a pivotal role. However, when measured per capita, Canadians hold the highest debt burden among wealthy nations.

"The average Canadian is highly indebted amongst all the OECD countries, including [the] USA. This indebtedness is a sign of a poor economy and poor household incomes,” said Dr. Siddiqui. “Rising inflation eroded real wages and the real wealth of the households. So, they are taking recourse to credit to finance their consumption, which certainly is not a very good sign.”

3. Young Ontarians are Looking Westward

For most young people who dream of home ownership in big cities like Toronto, their dreams have been dashed by the reality of the market. With the average house price in Toronto hovering around $1.1 million, many young Ontarians are not only seeking more affordable markets outside of the Greater Toronto Area but in other provinces, too.

"They are talking of going to Alberta...because they believe that of the other provinces, Alberta is better placed. There are oil resources there - something to fall back on," Dr. Siddiqui noted.

4. We’re Looking to the Government for Solutions

Dr. Siddiqui says the Canadian government must take the lead in implementing solutions, and this starts with its housing policy.

"Can government fiscal policy measures improve the housing situation? Yes. Supply-side rental housing can increase by the programs that they want to launch,” Dr. Siddiqui said. “I think that some of those policies giving some tax credit and those tax saving schemes will help Canadians, but I think more focused housing market policy measures need to be undertaken.”

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