Evidence of meeting #12 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cpi.
A video is available from Parliament.
3:55 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Thank you very much.
Can you please tell us what the benchmark housing price is that you are using to arrive at your year-over-year calculated change?
3:55 p.m.
Chief Statistician of Canada, Statistics Canada
Greg, do you want to talk a little bit about—
3:55 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
No, we don't want to talk a little bit about anything. I just want to get the number.
3:55 p.m.
Chief Statistician of Canada, Statistics Canada
As I mentioned earlier, the new housing price index, which shows—
3:55 p.m.
Chief Statistician of Canada, Statistics Canada
Yes, I believe it's 11.9% year over year—
3:55 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
No, I'm sorry. It's the price. It should have a dollar sign beside it.
3:55 p.m.
Chief Statistician of Canada, Statistics Canada
We'll have to dig that out if you want the actual—
3:55 p.m.
Conservative
3:55 p.m.
Chief Statistician of Canada, Statistics Canada
It's an index that we use to show the difference.
3:55 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
I realize that. So does CREA. They have a world renowned methodology, and they are able to publish the price. They have it at $811,700 right now, versus $641,300. Those are verified numbers. They just published them today showing a 26% increase, which is double what you're reporting. Frankly, I'm not aware of anybody who believes that we're only up 13% year over year on house prices. I'd be very curious to see what benchmark price you have for this year and last.
I want to move on to the weighting issue. You weight homeowners' replacement cost as 5.6% of the CPI. According to data also published by your agency, there were about $450 billion of real estate transactions from Q3 2020 to Q3 2021. That works out to 18% of the GDP.
Why is it that the homeowners' replacement cost [Technical difficulty—Editor] 5.6% of CPI, when in fact home purchases in dollar volume are 18% of the entire economy, three times higher in relative terms?
4 p.m.
Chief Statistician of Canada, Statistics Canada
The homeowners' replacement cost is for the times that somebody's house gets burned down and has to be completely built from the ground up. It's the increased cost of labour, the increased cost of lumber and services—
4 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
I'm sorry. I didn't ask what it is. I asked why it is such a small share of the CPI when it's such a massive share of the economy.
4 p.m.
Chief Statistician of Canada, Statistics Canada
It's because not everybody's house gets burned down and has to be rebuilt every month, so—
4 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Right, but I wasn't asking about the number of people who had a house burn down. What I'm saying is that these are raw numbers from your agency showing that the dollar value of home purchases equals about 18% of GDP. How can it only then comprise 5.6% of CPI? It doesn't make sense.
4 p.m.
Chief Statistician of Canada, Statistics Canada
Shelter is the number one cost of—
4 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
No, I'm not asking about shelter. I'm sorry. I'm not asking—
4 p.m.
Liberal
The Chair Liberal Peter Fonseca
Mr. Poilievre, please allow the witness to respond and give him equal time, as you've asked for. Allow the witness equal time, please.
Thank you.
4 p.m.
Chief Statistician of Canada, Statistics Canada
They are two different concepts. One is what the householder spends in terms of the weight of that basket that I talked about and what that change is month over month. There's no question that buying houses is a significant component of our GDP, so that number is absolutely correct. The percentage that a household expends in that basket of their overall income is about 30% for shelter, and of that, as we measure right across the country at any given time—
4 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Okay, that's about equal time. You are venturing off again from what I'm getting at. I realize that shelter is considered 30% of the basket. However, I'm not asking about that.
I'm asking about the homeowners' replacement cost, which is the actual cost of buying a house. It's the closest thing to buying a house that you crack in this CPI, and that only counts for 5.6% of the basket when it's equal to 18% of our economy. It seems that not only is your agency vastly underestimating housing inflation, but it is vastly underestimating the share of that inflation in the overall CPI calculation. That might be why the CPI is artificially low.
Do you want to comment, Ms. Ertl?
4 p.m.
Director, Consumer Prices Division, Statistics Canada
If I may, in addition to the house replacement cost, which is the key piece where new housing prices come in—only new, not resale—the owned accommodation also includes many other components of running a household. That is all the property taxes, the insurance, the total weight of owned—
4 p.m.
Conservative