PWC: Input costs the real threat
October 18, 2018
The costs of raw land, lending and steel are top of mind for Canada’s home builders as they attempt to deliver homes consumers can afford, according to a new survey by PwC Canada, 2019 Emerging Trends in Real Estate, that was published with the Urban Land Institute (ULI).
The proportion of household income needed to service the costs of a single-family home grew to 53.5 per cent in the first quarter of 2018, with Vancouver leading the charge with 119.3 per cent, the report found.
Land supply is the number one development concern heading into 2019 and the report highlights that all levels of government need to increase their focus on the supply side of the issue, not just demand. Markets like Edmonton and Montreal managed to bring new housing supply into balance, but markets like Toronto and Vancouver have yet to do so, the study suggested.
"Dealing with the affordability issue is a shared responsibility between government and developers. While government addressed demand by introducing measures like tighter mortgage rules and foreign taxes, they neglected the supply side," said Frank Magliocco, national real estate leader, PwC Canada. "Reducing regulation and making more land available for development in a timely manner will help address the affordability issue."
"The real estate industry is at a crossroads where it needs to work with many other sectors in order to thrive in the future. We're seeing more and more collaboration between architects, construction companies and the technology sector working to redefine how Canadians live," said Richard Joy, executive director, ULI Toronto.
“High housing costs are pushing Canadians, especially Millennials, to abandon the dream of owning housing in the city,” PWC states.