I know why house price sky rocks in Canada
Yes, houses are NOT affordable in Canada. We blame foreign buyers, blame vacate homes, etc. but is that the root cause? Not quite, but it is a basic supply and demand issue. And
We issued too few building permits and built too few houses.
Supply-side:
According to statistic Canada: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410006601
From 2012 till now we issue following building permit for entire Canada:
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| $48,408.35 | $48,409.49 | $50,991.60 | $53,349.98 | $55,139.68 | $59,692.08 | $62,843.08 | $62,112.63 | $67,171.73 |
The above table are in thousands of dollars for residential buildings. It is hard to use and let’s do some quick dirty transform:
Let’s assume each unit is $300,000 and can serve 4 people. Yes, it is too quick and dirty and does not factor the inflation. So we kind of get idea about how many people can served from new buildings:
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| 645 | 646 | 680 | 711 | 735 | 796 | 838 | 828 | 896 |
It is roughly 600 – 900 people, since we didn’t factor in inflation, I would keep these numbers.
Demand-side:
Since we are doing quick and dirty estimates, I assume the birth rate and mortality rate are the same and usually there is a small amount increase which is omitted for now.
Let’s look at immigration from statistic Canada https://www.statista.com/statistics/443063/number-of-immigrants-in-canada/
| 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| 259,110 | 260,040 | 263,100 | 267,920 | 240,760 | 323,190 | 272,710 | 303,330 | 313,600 |
So if I do simple math that divide the new people come in by the people can be served from the new build house, I conclude
we need to build 370 times more houses every year to keep up the speed!!!
Yes, it is a quick dirty estimate but reveals the underline truth. We are built way fewer houses than necessary. It may not necessarily be the job of the government to build affordable houses, but issue more building permits, train new builders, etc. to increase the supply side.
How to make supply and demand work should be the job of the policymaker of federal, provincial, and municipality governments.
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