Halting housing development creates demand and higher prices
With many Canadians, especially those first-time buyers desperate to find financially viable homes, the question must be asked as to why development has been halted! The present scenario indicates that urban planning expertise has been diverted from developing an infrastructure towards attempting to control an ever-expanding city mass. The future could see this control by necessity extend to the construction of new, high-density housing within presently established residential neighbourhoods.
For those who have secured mortgages at competitive rates, the question of not only affordability but the availability of housing is challenging. Reported statistics indicate that new housing construction in Toronto declined by 46-percent in the past 12-months. Comparatively, Hamilton and Oshawa have experienced some of the fastest property growth in the country!
A further comparison is that the issuing of building permits in these cities declined over the same period by 29-percent and 14-percent, respectively, with the average resale price of property in the region increasing by 22.7-percent. This is an indication of the financial challenges confronting first-time home buyers with favourable mortgage rates. It’s a situation that also raises the issue of who benefits, or what is to be gained by reducing home construction and encouraging property prices to soar beyond reasonable expectations?
Demand and supply raise issues for home-buyers and owners
The city of Vancouver is regarded as having a similar problem to Toronto, with a 40-percent rise in property prices over 12-months. Both cities should be seen with construction work underway throughout, however that is not the scenario at present. For potential home buyers and lenders who have the means to secure the best mortgage rates it creates issues of frustration and in certain instances, desperation.
There have been explanations and reasons why the supply of housing is not meeting demand, including the effect of local governmental policies, and public opposition to property development. This is effectively creating an environment of unreasonable demand and adversely affecting the home construction industry and those associated with it.
Home buyers who have secured excellent mortgage rates are being caught in a potential debt trap if they attempt to enter a market of skyrocketing home prices. This gives rise to yet another question; whether this is a positive economic environment in a country which is seeing a population growth of more than 300,000 new citizens each year?