Soaring housing costs limiting population mobility across Canada: CMHC

Construction cranes are seen in Toronto on Wednesday, July 5, 2017. (THE CANADIAN PRESS/Frank Gunn)

Canada Mortgage and Housing Corp. says high housing costs are restricting population mobility in the country, as Canadians are finding that it’s too pricey to buy or rent in cities where they seek jobs.

The federal housing agency said its analysis shows that a one per cent increase of housing prices in a destination city leads to a corresponding one per cent decline in the number of people moving there.

Since 1990, the percentage of households in Canada moving each year — including within municipalities — has dropped from nearly 17.8 per cent to just 10.1 per cent in 2020.

“This trend reflects many factors including population aging and technological changes, but housing costs have a role to play as well,” said CMHC deputy chief economist Aled ab Iorwerth in an online post.

He said the inability to move due to high housing costs is felt by both current workers and those new to the workforce, which limits skill development and reduces the economic growth of major cities.

“When choosing where to live and work, Canadians not only look at the wage increase they might get. They must be realistic about housing costs if they have to move to a new location,” ab Iorwerth wrote.

“And they may give up on opportunities given by a new job that improves their skills and knowledge — and hence the productivity of the country — if they can’t afford to cover the cost of housing after moving.”

Employers in cities with more expensive housing are subsequently forced to offer higher salaries to attract skilled workers to compensate for their cost of living, which raises business expenses and lowers productivity.

The analysis said Toronto, one of the two most expensive major cities in the country to purchase a new home, could boost its population by three per cent if it doubled its housing starts over the next decade.

Ab Iorwerth said that while many attribute the lack of affordability in Toronto and Vancouver to their growing populations, data shows Calgary and Edmonton have remained relatively more affordable despite faster population growth over the past two decades.

“The reason for this is that more housing supply keeps house prices under control relative to income, which in turn attracts people,” he wrote.

“Population growth can be accommodated if there is sufficient housing supply. In contrast, if there is insufficient housing supply then more people arriving in a city will lead to higher house prices limiting growth of the city.”

This report by The Canadian Press was first published Jan. 30, 2025.