Ontario Construction News staff writer
About 95 per cent of Québec business leaders say housing should be the top priority in the upcoming federal budget, calling it the biggest risk to the economy, according to a recent survey by KPMG in Canada.
The survey of 112 small- and medium-sized companies in Québec conducted last month found that nine in 10 say the rising cost of living, driven largely by housing costs, is forcing them to pay more for labour and affecting their ability to attract and retain already-scarce talent.
“The ripple effects from the high cost of housing and lack of supply are being felt throughout the economy,” says Caroline Charest, economist and Montréal-based partner at KPMG in Canada. “New and young Canadians are being shut out from purchasing and are finding rentals scarce and costly. Those who were able to enter the market a few years back due to record low interest rates now face the risk of default when their rates reset at upwards of three times what they pay now.
“All this is weighing heavily on business leaders struggling to attract and retain key personnel and talent, particularly in urban areas that have witnessed the highest increases in the cost of housing and in regions where housing is scarce.”
The research found Québec’s business community is looking for more innovative public-private sector housing solutions, with 88 per cent saying public-private collaboration will be required.
However, the challenge for communities extends beyond housing to infrastructure and services that will be required to support population growth, says Mathieu Bouchard, Executive Director and Lead, Impact Strategy for Industrial and Commercial Innovation, for KPMG in Montréal.
“The central questions are, who are we building housing for, how will it be serviced, and how do we create cities and communities that we all want to live in?,” he says.
“The reality is, despite a joint commitment by the federal and provincial governments to accelerate the construction of residential units in Quebec through a combination of additional funding and smarter regulations, many municipalities don’t have the bandwidth or technology to meet the goals set by the other two orders of government,” Bouchard said. “It’s not only about the amount of money available to kickstart building but the reliability and sustainability of the source of funding around all of the infrastructure that will be needed to support housing development.”
Key findings:
- 96 per cent of 112 business leaders in Québec say high housing costs and lack of supply are the biggest risks facing Canada’s economy and should be the top priority in the upcoming Federal Budget
- 90 per cent say the rising cost of living (driven largely by housing costs) is forcing their organization to pay more to attract and retain talent
- 86 per cent are budgeting for higher labour costs due to competition for talent, inflation, and the high cost of affordable housing
- 88 per cent say that solving the housing crisis will require public-private sector collaboration
- 86 per cent say the high cost/lack of affordable housing has hurt their ability to attract and retain employees
- 88 per cent expect inflationary pressures in Canada to persist until the housing shortage and high rents are dealt with
- 81 per cent say the high cost/lack of affordable housing is a greater threat/risk to the economy than inflation
More than 80 per cent of respondents said the government should use the income tax system to make housing more affordable, including making mortgage interest tax deductible. Nine in 10 say the federal government should maintain the current capital gains inclusion rate (50 per cent), as well as the Lifetime Capital Gains Exemption and the Principal Residence Exemption.
Also, 88 per cent said the government needs to introduce innovative, repayable tax measures that provide relief to existing homeowners faced with mortgage renewals, as a buffer against mass mortgage defaults similar to the Tax-Free First Home Saving Account for Canadians saving for a home.
KPMG in Canada surveyed 534 Canadian companies online between February 3 and February 27. All respondents are business owners or executive-level decision makers.