Canada, the world's second biggest country by landmass, is effectively running out of land even though the real-estate infrastructure is booming compared to anywhere else in the world. This is happening due to the worsening imbalance between supply and demand. The buyers in the country want large homes however builders can’t provide them due to the unavailability of enough space in and around the major cities where people work. Canadians usually prefer single detached houses and now these may soon be out of reach in the places where people want to live.
This situation can remove the idea of home to include condos and rentals. It can potentially transform how the middle class does everything from raising families to saving for retirement, according to a Bloomberg report.
Robert Hogue, an economist at Royal Bank of Canada feels that running out of land is a recent phenomenon in Canada compared to Europe, or Japan, or other parts of the world. “I think that for future generations, homeownership is going to look a lot more European, for example, than it does today,” he said.
Buying a home has been seen as the surest path to middle-class security in Canada. Canadians live in some of the biggest houses in the world. According to data compiled from local real estate boards, nearly 60 per cent of home sales in 2020 in 18 communities in and around Toronto, Montreal, Vancouver and Ottawa were for single-family detached houses and only about a quarter of the sales in these places were for apartments.
Of the new housing stocks, 60 per cent is apartments, and just 25 per cent detached houses, according to government data. This has forced bidders to go for an increasingly constrained supply of single-family homes and by building such homes, the builders are now running out of land.
Canada boasts a total area of about 10 million square kilometers (3.9 million square miles), however, most Canadians are living in major cities not far from the U.S. border due to the availability of jobs in those cities.
City-specific factors like mountains, islands have also constrained the use of land in cities. With more demand for single-family homes in such a situation has forced the country builders to run out of land.