Ingersoll, Ont., electrician turns to community to help house tradespeople working on CAMI plant -


A single-family home is now almost three quarters of a million, putting it out of reach for many

Posted: June 19, 2023
Last Updated: June 19, 2023

The price of single-family homes nearly doubled in the last four to five years in London. (Jonathan Hayward/The Canadian Press)

Economists say high real estate prices in London, Ont., have put housing affordability at “crisis levels,” damaging the economy by making it difficult for local businesses to attract and retain labour, while forcing families to spend more of their budgets on rent or servicing mortgage debt.

It comes as the price of a single-family home in the city nearly doubled over a four-year period to $743,195 — putting the dream of home ownership further out of reach for many middle-class families.

The cost of rent in the city has risen about 90 per cent over the same period, driving the average cost for a one-bedroom apartment in London at $1,730 a month in April, according to the latest pricing report from online listing company

“It’s at crisis levels for both rent and single-family homes,” said Mike Moffatt, a Western University economist and the senior director of policy at the Ottawa-based think tank The Smart Prosperity Institute, which has published a number of studies on the economics of housing in Ontario.

How high housing costs affect local businesses

“We’ve seen the price of single-family homes nearly double in the last four to five years. Interest rates are higher than they were back then, so monthly payments are up substantially.”

Economists say high housing costs can reduce worker mobility, making it more difficult for businesses to attract and retain the best talent. (Chelsea Kemp/CBC)

It isn’t just payments that are up. Debt, in general, is at record levels across the country. A report from the Canada Morgage and Housing Corporatation about household debt in May conclude that, at 107 per cent, Canadians have the worst household debt-to-GDP ratio of any G7 country

When families are spending more on rent or mortgages, it takes money away from what would otherwise be spent in the rest of the economy, Moffatt said. 

“It’s harmful to local businesses if individuals and families are paying a lot on either rent or interest costs — that’s money they’re not spending going to stores or going to restaurants.”

It also harms businesses by making them less competitive, he said, especially when they’re being forced to pay an employee more to make up for cheaper real estate in cities such as Calgary or Edmonton, where the average single-family home last month cost $674,000 and $512,000 respectively. 

“Imagine a nurse or an electrician, or someone like that going, ‘Okay, well, why would I stay here when I could move to a place like Alberta and pay significantly less for a home and oftentimes earn higher wages?'”

The evidence is already there, with a net 20,000 people recently left Ontario for Alberta, driven west by the high cost of living in central Canada, Moffatt said. 

How interest rate hikes can have the opposite effect on inflation

Wages, compared to housing costs, have stayed relatively flat, said Diana Mok, an associate professor at Western University who studies the economics of real estate.

Wage and income growth hasn’t kept pace with the growth of real estate and rent, reducing the spending power of individuals and families. (Colin Butler/CBC News)

“Salaries, wages and incomes are not increasing as fast as housing costs in general,” she said, adding families might take out an extra line of credit to balance the household budget against increased housing costs. 

“The thing is, if you take an extra loan like a line of credit, it’s going to hurt the budget of the household or the person because it’s coming from higher interest costs as well.”

The Bank of Canada recently increased its key lending rate a quarter point to 4.75 per cent. Mok said she wouldn’t be surprised if the central bank keeps raising rates — something that could backfire if the people at the helm of the nation’s economy aren’t careful. 

“One of the biggest components of inflation is really housing expenses,” she said, adding that higher interest rates as well as soaring real estate and rent costs contribute significantly to the country’s overall inflation rate, which then prompts the central bank to raise rates to bring down inflation.

“We raised the interest rate to keep inflation low. At the same time, you’re bringing up housing costs,” she said.

“It defeats the whole purpose.”


Colin Butler covers the environment, real estate, justice as well as urban and rural affairs for CBC News in London, Ont. He is a veteran journalist with 20 years’ experience in print, radio and television in seven Canadian cities. You can email him at

View the full article from the original source