By Tom Parkin
December 10th, 2024
BURLINGTON, ON
Housing prices surged 72% under Doug Ford from 2018 until a price peak in February 2022. Ottawa’s immigration increase came after that.
Toronto’s housing affordability crisis had already peaked and housing purchase and rental prices were already falling when the number of new Ontario residents began to increase each quarter, according to an analysis of government and industry data.
The federal government announced a plan to increase immigration targets on February 14, 2022. The number of new Ontario residents each quarter began a sustained rise in the second half of 2022.
Immigration increases happened as housing prices fell.
By the second half of 2022, the Toronto housing sales market had already finished its massive price run-up. Prices began to decline in March 2022 and hit a new post-peak low last month.
The average asking price for a one-bedroom apartment began a surge in April 2022, well before the pace of new Ontario residents began to rise (see chart, below). By the time the pace started rising, the rental market had levelled off. And when the pace of population increase rose fastest, the asking price of rent was falling.
Basic logic: causes precede effects, not the other way
Because causes precede effects, claims that Ontario’s housing crisis was caused by immigration — and not government or central banking policies — cannot be correct. The timeline doesn’t fit.
The factors that drove the housing price mania include the ultra-low interest rates from March 2020 until March 2022, which surged demand, and the failure of the Ford PC government to spur housing starts, which limited supply.
The average house price in the Greater Toronto Area increased by 72% from the month of Doug Ford’s election until the housing market peak in February 2022. The asking price of rent increased 22% over just six months from April to October 2022.
In the 2022 Ontario election, the Ford PCs promised to put Ontario on a path to build 1.5 million housing units by 2031, a pace of 12,500 a month. The PCs have failed to hit this target every month often reaching less than 5,000 a month.
A 2023 announcement that provincial policies would lead to houses with yards and driveways coming to the market at a price under $500,000 has similarly come to nought.
The housing arc: from mania to crash to recession
When interest rates began to increase in March 2022, housing market demand cratered. The overpriced market crashed, leaving the wreckage of maxed-out borrowers owning homes not worth what they paid.
The price of the CREA’s average composite benchmark GTA house has fallen from $1.31 million in February 2022 to $1.06 in November 2024.
Those who bought with ultra-low financing from 2020 to 2022 soon face the “renewal cliff” of higher interest rates, taking a big bite out of consumer spending.
Unlike the rest of Canada, Ontario retail sales remain below a peak set in February 2022. Unemployment has risen dramatically, hitting 7.6 % in November, and the province is down 195,000 full time jobs since July
I guess it’s down to me; can I please see the chart showing house prices from the 1960s to the present, I’ll even settle for the 1990s.