Politicians may claim housing affordability is a big issue this federal election, but a new study examining their promises reveals all parties generally fall short of addressing the issue.
University of British Columbia’s Generation Squeeze Lab — a think tank representing concerns of Canadians in their 20s, 30s and 40s — analyzed the housing platforms of the Conservatives, Liberals, New Democratic Party and Greens. While all fared well in some areas, including addressing harmful demand that artificially inflates prices, they scored poorly overall.
“All the parties are making some of the advances toward the goal (of affordability),” says Dr. Paul Kershaw, founder of Generation Squeeze, and a professor at the School of Population Health at UBC.
“But none are advancing ideas that will get us there quick enough, and that’s because no party has come to terms with the fundamental tension.”
That “tension” is the result of Canadians — Albertans included — still wanting to have it both ways with their home.
“We’ve wanted housing to be a home and we’ve wanted housing to be an excellent performer in our investment portfolios,” he says.
“In other words, we’ve wanted home values to grow faster to the economy, but you can’t have both.”
Overall, all parties scored worse than four out of 10 on Generation Squeeze’s methodology that looked at promises for boosting market supply, reducing harmful demand and improving affordability.
This is largely because none has addressed the issue of prices growing faster than income, he says. While rapid price growth benefited baby boomers, it has made ownership much more challenging for their adult children.
Even Calgary and Edmonton have not been immune to the problem, despite prices coming down in the last few years.
“Sure, there’s a difference in the market in Alberta compared with B.C. and Ontario,” he says.
In major centres like Vancouver and Toronto, the dream of ownership is almost out of reach for younger generations, Kershaw adds.
But the data also suggest housing is less affordable for today’s young Albertans than it was four decades ago.
On average in Canada it took an adult, between ages 25 and 34, five years of full-time work to save a 20 per cent down payment on an average priced home in 1978. Today it takes 13 years. And in Vancouver and Toronto, it’s 29 and 21 years respectively.
By comparison, it takes 10 years in Calgary, and in Edmonton, it’s nine years.
Kershaw does note Generation Squeeze’s work is based on 2018 figures, acknowledging Alberta has been in the midst of a price slump that has extended into 2019.
For example, Edmonton prices fell more than six per cent last month, year over year, Realtors Association of Edmonton data show. And the media priced home in Calgary fell almost three per cent year over year, Calgary Real Estate Board statistics show.
“The stabilization in home prices has been helpful for buyers, but it’s also happened in the context of a broader economic downturn,” Kershaw says.
So while Albertans have seen home prices fall, they haven’t seen their income rise.
In fact, Generation Squeeze data show, after accounting for inflation, young Albertans’ average income has remained constant over four decades while home prices have almost doubled.
“So that tells you we haven’t seen good wage growth to capitalize on those home prices,” Kershaw says.
Copyright Postmedia Network Inc., 2019