Photo: James Bombales
As demand for GTA housing continues to grow, home prices are sure to follow. Plenty of industry players chalk up high prices up to a lack of supply — but one expert says things are even worse than they look at first glance.
In a unconstrained supply market, housing supply should rise naturally with housing prices. But, according to Ryerson Centre for Urban Research and Land Development senior researcher Diana Petramala, that’s far from the reality in the GTA.
In her most recent report, Petramala cites data from the Canada Mortgage Housing Corporation that found that in Canadian cities such as Montreal, Calgary and Edmonton, housing starts increase 1 to 2 per cent for every 1 per cent increase in home prices. In Toronto, starts only rise 0.5 per cent for every 1 per cent price bump.
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That means that if GTA housing starts had grown at the same rate as other Canadian metro areas between 2010 and 2016, there would have been an additional 18,000 to 30,000 homes added to its housing supply.
“The issue really is available land,” Petramala tells BuzzBuzzNews. “We have the lake to the south which constricts us, and we’re a lot more built up than other Canadian metro areas. But we’re also really bad at revitalizing or reusing land.”
Petramala notes that the majority of Toronto is zoned for single-family homes, so that only small pockets of the city are able to achieve density through high rise developments.
“You might see in another Canadian city, for instance, that a low-rise home is converted into townhouses, or a four-story walk up,” says Petramala. “That doesn’t happen in the GTA.”
What could make a difference in Toronto’s increasingly pricey market? New zoning regulation, according to Petramala.
“Regulation that allows for middle-density housing could address a lack of supply in the GTA,” she says. “People think of land as finite, but it’s also reusable.”