Blame urban growth boundaries and agricultural reserves for the housing affordability crisis in Canada

David LeisHousing affordability is one of Canada’s most pressing issues today. The situation in cities like Toronto and Vancouver has become a veritable train wreck, with homes becoming increasingly unattainable for the average Canadian. This crisis is not just a matter of market fluctuations; it is the direct result of misguided government policies and overregulation, particularly with respect to land use.

In the 1970s, housing was relatively affordable. The median house price in Toronto was about 3.9 times the median household income. Today, that number has ballooned to 9.3. Vancouver has seen an even more dramatic increase, from around four times the median income to an astronomical 12 times. This trend is mirrored in other cities worldwide, such as Sydney and parts of New Zealand. The primary culprits? Urban growth boundaries and agricultural reserves, including so-called green belts.

For decades, provincial laws have restricted land development, particularly in desirable areas like Vancouver. These restrictions have created an artificial scarcity of land, driving up prices. As demand continues to outstrip supply, prices skyrocket, making homeownership an elusive dream for many. It’s not just the price of houses that have gone up; the cost of land has become exorbitant. Middle-class Canadians, who once could afford to buy homes, are now priced out of the market and have little hope of ever buying a home.

housing affordability crisis in Canada
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The impact of these policies extends beyond the immediate financial burden. As housing becomes more expensive, people are forced to move further away from city centres to find affordable options. This migration trend is evident in the exodus from Toronto and Vancouver to smaller towns and cities. These moves disrupt communities, strain smaller markets, and push the affordability crisis to new nearby areas.

One of the most concerning aspects of this issue is the failure of urban planners to understand the economics of housing. The intention behind urban growth boundaries and agricultural reserves was to create better living environments and preserve farmland. However, the unintended consequence has been the opposite. By restricting the natural growth of cities, these policies have inflated land prices and made housing unaffordable for the average Canadian.

Furthermore, increasing density within cities is often touted as a solution, but it rarely addresses the root of the problem. Higher density often correlates with higher housing costs. In cities like Toronto, dense urban living has not translated into more affordable housing. Instead, it has contributed to the rising prices, making it even harder for families to find suitable homes.

So, what can be done to solve this crisis? The first step is to acknowledge the root of the problem: overregulation and restrictive land-use policies. Governments need to reassess and modify these regulations to allow for more development. This change would help increase the housing supply and, over time, bring prices down to more affordable levels.

Opening up Crown land for development is one practical policy solution. The government can help alleviate the scarcity driving up prices by making more land available for private development. Additionally, streamlining the permitting process can make it easier and faster to build new homes, reducing the time and costs associated with development.

It’s also crucial to maintain affordability in areas currently less affected by the crisis. Provinces like Alberta, Saskatchewan, and parts of Atlantic Canada still offer relatively affordable housing. Policymakers in these regions should learn from the mistakes of cities like Toronto and Vancouver and avoid implementing similarly restrictive policies.

Another aspect to consider is the impact of immigration on housing demand. While immigration is vital for economic growth, it exacerbates the housing crisis in an already strained market. A balanced approach is necessary, where immigration policies are aligned with the capacity to provide affordable housing.

Finally, a cultural shift towards valuing homeownership and affordable living is essential. People need to understand that housing is not just a commodity; it’s a fundamental aspect of well-being and community stability. Governments should focus on creating policies that support affordable homeownership rather than inflating property values.

The housing affordability crisis in Canada is a complex issue rooted in years of misguided policies and overregulation. By reassessing land-use regulations, opening up more land for development, and aligning immigration policies with housing capacity, we can begin to address this crisis. It’s time for a new approach that prioritizes affordable housing for all Canadians, ensuring that cities remain vibrant, livable, and inclusive for future generations.

David Leis is the Frontier Centre for Public Policy’s vice president for development and engagement and host of the Leaders on the Frontier podcast.

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