Canada’s housing market is not only facing the challenges of rising prices and supply shortages, but there is also a “growing mismatch” between the housing types being built and those preferred by many Canadians, according to a new report.
However, the price increases over this period were not equal across housing types, with prices for “ground-oriented” single-family homes and townhouses increasing by 31 percent over the same period, compared with a 17 percent increase for apartments. While the divergence in price appreciation by housing type became more pronounced during the pandemic, it was already present in the pre-pandemic period, the report said.
The prices of different housing types have shown a significant divergence since the 2010s, initially led by single-family homes until apartment prices caught up and briefly surpassed them in February 2020, just before a COVID-19 state of emergency was first announced. However, the report said that by February 2023, single-family homes had become the most expensive housing type, growing 3.41 times more expensive than in January 2005—the earliest data that the study found available—followed by townhouses at 3.28 times and apartments at 3.12 times.
“It is unclear whether and for how long these price reductions will persist, but what is clear is that the housing types with the strongest price appreciation throughout the pandemic were ground-oriented, including single-family homes and townhouses,” it said.
Despite the strong demand for ground-oriented housing types, nationwide ground-oriented housing completions declined during the 2010s, alongside a general decline in total housing completions since the 1970s, bucked only by rising apartment completions in recent years. There has also been no notable increase in completions of semi-detached and row houses, though both of which are often described as rapid means of growing the ground-oriented housing stock, the report said.
While the report identified the mismatch between housing supply and demand for ground-oriented housing, it said more research is needed to determine the causes and consequences of the mismatch and possible solutions.
The report was co-authored by Josef Filipowicz and Steve Lafleur. Filipowicz is an analyst at the Canada Mortgage and Housing Corporation and the Fraser Institute’s Centre for Municipal Studies, while Lafleur is an independent public policy analyst and senior fellow of the Fraser Institute.
