The head of Canada Mortgage and Housing Corporation (CMHC), the federal housing agency, has sounded the alarm on rising home prices in key Canadian markets and the growing lack of housing affordability.
Evan Siddall, President of CMHC, said in a speech delivered at a conference in Australia that more and more Canadians are having to rethink the idea of owning a home due to surging prices in major cities such as Vancouver and Toronto.
“The dream of home ownership may be fading for some,” said Mr. Siddall. “Housing affordability has become a serious problem in our major cities.”
This is not the first time Mr. Siddall has raised concerns about the Canadian housing market. And his latest comments come a week after Prime Minister Justin Trudeau introduced $40 billion of spending over the next decade to fix public housing and offer new rent subsidies to poor families.
Prime Minister Trudeau said a federal housing strategy is necessary given that prices in Vancouver and Toronto have surged to the point that traditional single-family homes in those markets now cost more than $1 million – a situation that has led many home buyers to move to distant suburbs and lawmakers to introduce special taxes on foreign ownership of Canadian properties.
In Australia, Mr. Siddall said that higher house prices are likely the cause of declining home ownership rates among Canadians. Canada also remains vulnerable to household debt levels that have reached 175% of disposable income – among the highest in the industrialized world according to the Organisation for Economic Co-Operation and Development (OECD).
Toronto home prices have climbed 63% over the last five years, with about half of that gain coming in the last two years, according to the Teranet-National Bank Home Price Index. In Vancouver, house prices have jumped 65% since 2012.
