Thank you for having me here today. My name is Mike Moffatt and I'm the senior director of the Smart Prosperity Institute, a clean economy think tank housed at the University of Ottawa.
Over the past five years, home prices have doubled in Halifax, in Kitchener-Waterloo and on Vancouver Island. They're up a whopping 164% in my hometown of London, Ontario. Despite that, they've not risen at all in Regina. They're up marginally in St. John's, Newfoundland, and are up less than 40% in Winnipeg and Quebec City, just a bit above inflation.
Why are home prices skyrocketing in some parts of Canada but not others? The answer is simple. In regions where housing completions cannot or are not allowed to keep up with population growth, we have skyrocketing prices. Southern Ontario is one such region. Before 2016, Ontario's population grew by roughly by 120,000 persons per year every year, and house price growth outside the greater Toronto area was relatively modest. The oil price crash of 2014-15 and the liberalization of federal policies governing international students caused an overnight population boom in Ontario centred around Toronto, and population growth rates nearly doubled overnight, as we detail in the report “One Million New Ontarians”.
In response to this population boom, Ontario changed almost nothing. Municipal planners all but ignored increased population growth. The 2017 revision to the provincial growth plan ignored the issue entirely, using population growth estimates that were several years out of date, which we detail in our report “Forecast for Failure”.
High population growth and low housing completions lead to housing shortages, skyrocketing prices and an exodus from the Toronto region. In the year before the pandemic, 60,000 people, on net, moved out of the city of Toronto and Peel region to other parts of the province. Last year, that figure rose to 72,000. Most of those migrants were between the ages of zero and four and the ages of 28 and 32. It was young families that were priced out of the Toronto region and were forced to “drive until they qualified”, going to other parts of southern Ontario. This exodus caused Toronto's population of children under the age of five to drop to levels not seen since the 1970s.
Because of the restrictions on building child-friendly, climate-friendly homes in our cities, those young families were often ending up in small-town Ontario, where family-friendly housing was allowed to be built. In our report “The Growth of London Outside London”, we show that historically roughly 20% of housing completions in the London, Ontario, area were outside of the city of London. Over the last decade, that figure has steadily risen to 41%.
While there are many benefits to small-town living, and while those homes may be child friendly, they're not particularly climate friendly. Families are being pushed into neighbourhoods that are not walkable and will never have access to public transit. This sprawl leads to increased infrastructure costs and it strains big city municipal finances. Those families will visit London to shop, work and learn using local infrastructure, but they will not pay municipal taxes to the City of London. With increased immigration targets and rising numbers of climate refugees and refugees from Ukraine, Ontario's population growth will remain strong, creating a further need for family-friendly housing. Regions that cannot build this housing should expect to see population outflow and labour shortages, leading to slow economic growth.
The federal government and all four major Ontario provincial parties have been committed to setting a target of 1.5 million net new new housing units in Ontario over the next decade, a doubling of housing starts from the previous decade. We believe at SPI that this is an appropriate target. However, we caution against the thinking that a unit is a unit is a unit. Ontario has been able to increase the construction of small high-rise apartment units in our major cities and single detached homes in our exurbs and small towns. What is missing is child-friendly, climate-friendly housing within our cities. Whether through the housing accelerator or other policy levers, the federal government should not just ensure that it is incenting more of the same, but instead ensure that its housing policies are compatible with its economic and climate goals.
I look forward to your questions.