Scotiabank chief economist says expensive homes price to pay for Canada’s “structural housing deficit”

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      Jean-François Perrault, senior vice president and chief economist with Scotiabank, says there is a price to pay if Canada does not fix its housing situation.

      “It means that there’s no chance affordability is going to improve,” Perrault told the Straight in a phone interview.

      What’s a way to put it more simply?

      “Unless we find a way to improve things, you know, prices are going to keep going up and up and up,” Perrault explained.

      Perrault recently released a report about housing numbers in the country.

      The report indicates that compared to its peers in the G7, which is the grouping of the world’s most developed nations, Canada has the lowest population-adjusted housing stock.

      Excluding Canada, the G7 has an average of 480 private dwellings per 1,000 people in 2020.

      In Canada, it was 425 to 426, based on Perrault’s report and the figures he provided to the Straight.

      Just the same, the country lags behind the U.S., which has 427 per thousand population, and the U.K., 433.

      France is at the top, with 540.

      In his report, Perrault noted that relative to the G7 average, all provinces in Canada other than Nova Scotia (484), and Newfoundland and Labrador (518) are “below our peers”.

      Meanwhile, New Brunswick (471), Prince Edward Island (465) , and Québec (470) are “reasonably close to the G7 average”.

      “All other provinces are significantly below,” Perrault wrote.

      Now, the Scotiabank executive noted that “comparing individual provinces to the national averages of G7 countries can be misleading”.

      And so Perrault went on to compare provincial numbers.

      Based on the figures provided the Straight, Canada has an average of 426 private dwellings per 1,000 population.

      Manitoba (409), and Ontario and Alberta (398 each) are below the national average, while the rest are above.

      In B.C., the number is 429.

      For Saskatchewan, it’s 433.

      Perrault’s report on January 12 makes a calculation on how to ease some of Canada’s “structural housing deficit”.

      “The gap in relation to G7 countries would only be partially closed if we assumed that each of these provinces eliminated the difference relative to the remainder of the country,” the Scotiabank chief economist wrote.

      Perrault explained: “This would raise Canada’s national average to 447 dwellings per 1,000 individuals from 425. That would put Canada on par with the UK and above the US, but still leave us well below the 480 dwellings per 1,000 individuals average in the G7.”

      Hence: “To close that gap completely, we would need to build another 1.8 million housing units. The challenge, therefore, is not strictly limited to Alberta, Manitoba, and Ontario.”

      Perrault wrote that the “chronic shortage of housing relative to the population’s needs will put upward pressure on prices and reduce affordability”.

      “This is not to say prices will increase every month,” he noted.

      “There are likely to be months or short periods where prices do not rise and perhaps fall,” Perrault continued, “but our view is that prices will generally be on the rise until a better balance between needs and availability is found.”

      In the interview, Perrault told the Straight there is no easy answer to a problem as complex as Canada’s housing shortage.

      “Oh my goodness! I guess it’s like a billion-dollar question,” he said.

      However, Perrault noted there is no way out except to “accelerate the pace of building homes”.

      Meanwhile, the continued increase in home prices will leave some people behind.

      “It’s great if you own a home; it’s not great if you don’t own home,” Perrault said.