Opinion: Cities have to expand for house prices to fall — via fpcomment
The problem has been worsening since the middle 2000s, when the government of Dalton McGuinty enacted the “Places to Grow” program, with its greenbelt banning housing construction just outside the edge of existing development. This made the land market for housing much less competitive even as strong demand for housing continued. Not surprisingly, housing affordability began to deteriorate in the Toronto CMA.
There is no mystery here. International research shows that policies of urban containment, such as greenbelts and growth boundaries, are associated with large price increases. The eight-nation Demographia International Housing Affordability Survey that I have been publishing for 18 years showed, in the last pre-pandemic year , that all markets with severely unaffordable housing had urban containment policies.
The cost of actually building a house does not vary that much across Canada. The Altus Group’s surveys show Toronto construction costs to be about one-third higher than Winnipeg’s. Yet houses in Toronto cost more than 250 per cent more than those in Winnipeg, with much of the difference being due to land and land-related costs. As the numbers suggest, Winnipeg does not engage in market-distorting urban containment.
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