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Alicia Planincic: Can Alberta keep its affordability advantage as home prices cool everywhere else across Canada?

Commentary

Mountains loom over condos being constructed in Canmore, Alta., Monday, April 24, 2023. Jeff McIntosh/The Canadian Press.

In each EconMinute, Business Council of Alberta economist Alicia Planincic seeks to better understand the economic issues that matter to Canadians: from business competitiveness to housing affordability to living standards and our country’s lack of productivity growth. She strives to answer burning questions, tackle misconceptions, and uncover what’s really going on in the Canadian economy.

It’s no secret that owning a home has grown out of reach for many. In a recent report that looks at housing affordability across the globe, four of the six Canadian cities examined were labeled as either “severely unaffordable” or “impossibly unaffordable.”

The two that weren’t? Both are in Alberta.

Not only was housing in Alberta significantly more affordable to begin with but also, prices in Alberta didn’t surge as they did elsewhere in the early 2020s. Now, that is changing.

Since 2023, prices have skyrocketed thanks to the province’s extraordinary population growth. Somewhat ironically, affordable housing is what is attracting those from higher-priced markets to Alberta.

Could this bring an end to affordability in Alberta, too? Already, prices have risen more for an apartment in Alberta than they have in B.C. since 2019. Prices of single-family homes have further to go but the same would be true in a couple of years if current trends were to continue. These increases, while good for owners, will be tough on renters—increasing the likelihood of pushing them out of home ownership or even into homelessness.

But as far as relative affordability goes, an enormous gap remains. A typical home in B.C. costs double that of one in Alberta. The province’s Alberta is Calling campaign was onto something when it targeted these higher-priced markets; it has an incredible advantage in an era of housing unaffordability.

Graphic credit: Janice Nelson.

Even so, this advantage could quickly erode. If price growth were to continue at its current pace, it would be more expensive to buy a single-family home in Alberta than in Ontario within just six years and more expensive than in B.C. within eight. In a more reasonable scenario where home values increase at historical norms in other markets, it would take longer but still evaporate within a couple of decades.

Assuming migration to the province continues, what will determine just how much further prices rise will be the province’s ability to respond to new demand. Maintaining its advantage will require Alberta to do what other provinces have struggled to do—build housing at the pace needed to match population growth.

This post was originally published by the Business Council of Alberta at businesscouncilab.com

David Mulroney: The next PM must remind Canada’s public servants who really runs the show

Commentary

A woman walks past the the Office of the Prime Minister and Privy Council building in Ottawa, June, 30, 2020. Adrian Wyld/The Canadian Press.

The Canadian Public Service enshrines respect for democracy among its core values. Public servants are required to faithfully implement the policies of a new government regardless of their own political views. If they can’t, public servants must disclose this impediment and accept the possible consequences that flow from it.

But despite this, there has always been a tendency for some public servants to try and keep programming at arm’s length from unwanted oversight. This tendency was, in my experience, particularly acute at the former Canadian International Development Agency, or CIDA.

When I served as foreign policy advisor to the prime minister (a public service appointment within the Privy Council Office) I struggled for months to obtain a list of initiatives Canada was supporting at the U.N. under the heading of “Maternal Health.” I came to believe I was being stonewalled because officials were reluctant to reveal the extent to which Canada was promoting abortion in the developing world.

As associate deputy minister of foreign affairs with special responsibility for coordinating our mission in Afghanistan, it took me months to obtain a list of CIDA’s hodgepodge of programming in that country. I needed this because there was a worrying disconnect between the projects CIDA wanted to fund and the Kandahar mission then being undertaken by the Canadian Forces.

And as ambassador for Canada in China, I refused to sign off on a CIDA project that had as its objective improving the business skills of Tibetan women dubiously identified as “sex workers.” I suggested that we instead offer training in skills that would free women in Tibet from having to sell themselves to Chinese truckers to feed their families. CIDA ignored me and quietly secured project sign-off back at headquarters.