Canadian Housing Grew Faster Than Population, Speculative Mindset Building: BMO

Canada’s national statistics agency revealed a surprise in the latest Census drop. BMO Capital Markets found Canada’s housing stock has grown faster than its population. Robert Kavcic, a senior economist at BMO, pulled historic data and found this to be the case for two decades. The bank acknowledges long-term supply issues, but believes how much that is driving prices, is overstated. A speculative mindset that has accelerated with price growth is the primary driver.

Canadian Residential Real Estate Grew Faster Than Population

Canada’s residential count grew faster than the population. The latest census shows the population increased by 5.2% from 2016 to 2021. In contrast, the number of private residences grew by a mind-blowing 5.7% over the same period. “Not to poke the bear, but there was one curious fact in the 2021 census numbers,” says Kavcic immediately before poking the bear.

“In Ontario the total population count grew by a hefty 5.8% between 2016 and 2021. But, the private dwelling count in the province rose by an even stronger 6.2%,” he highlights. Ontario has seen population surge higher, but housing construction has moved even faster.

Other regions have seen price growth primarily concentrated in urban areas. In that case, one can argue it depends where the housing has been growing. That’s what makes the situation a little more curious in Ontario. The province is seeing prices rise everywhere, with limited inventory for sale. This isn’t a recent phenomenon, but the bank says supply has outrun the population for decades.

Canada Has Steadily Seen The Number of Dwellings Per Person Rise

BMO found Ontario’s housing stock grew faster than the population for two decades. “In fact the number of dwellings per person has been steadily rising over the census periods going back to 2001,” argues Kavcic. 

Ontario Dwellings Per 1,000 People

Source: BMO.

Canada is now seeing the most housing delivered since the 70s, and that’s with supply chain delays. There’s much more coming in the not-so-distant future, especially in Ontario. “And, let’s remember that there is a record number of homes currently under construction too,” he adds.

Comparing Canada’s Housing To Older G7 Countries Is A Bad Take

Canada’s housing is often compared to its G7 peers, but that only works for some issues. Dwelling count isn’t one of those issues, according to the bank. BMO addressed the fact that Canada has the lowest housing stock per person in the G7, a point often made by the industry. Though this has been true for a while, prices have only begun to accelerate recently. The bank says this has to do with the age of Canada’s population.

“We really need to look at 18+ population, especially when making cross-country comparisons,” says Kavcic. Adding, “Canada is young versus the G7, so our housing stock per person should be lower… That data will come in the next census wave.”

BMO clarifies — they aren’t saying Canada doesn’t need more housing stock. The country needs to keep building to prevent a deficit, especially with fast-population growth. The soaring price growth is more of an issue of speculation exacerbated by the Bank of Canada (BoC).

“We acknowledge longer-term issues on the supply side, but the volume is much too high on that front. Meanwhile, speculative demand psychology keeps building,” ends the research note.
A few days ago, BMO estimated the excess demand created by the BoC’s excessively loose policy. The central bank’s policy drove billions in excess sales, creating more than usual demand. As rates rise, they see demand falling and inventory rising. After all, few people sell an asset while it’s soaring in price, especially if it’s tens of thousands per month. They see the inventory problem resolving very fast after interest rate hikes.



We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.

Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.

  • RW 2 years ago

    No s–t. My neighbor is a real estate agent sitting on a floor at a recent build and doesn’t plan on listing any units until price growth dips negative. Small pull back is only going to roll back a few months of gains but selling too early and you miss out on the biggest runs.

    Tried to pull me in on this scam by selling clients pre-sales he unloads after building, they just need to sign up with their home equity for the 20% down. They collect tens of thousands per month and he books the commission on the units in the building.

    • Ethan Wu 2 years ago

      and they get people to fund the loan for the property using their HELOCs and syndicated mortgages. I wonder how much of Canada is just dependent on housing leveraged on housing, leveraged on housing.

      The gov won’t give those numbers because it would be panic-inducing confirmation.

  • Estevam 2 years ago

    I suggest create ghost city with free or low tax. According with our government we need to build more.

    • Mitch 2 years ago

      This isn’t a terrible idea.

    • Chris 2 years ago

      Your suggestion has merit. Canada needs to be looking at expanding second and third-tier markets and developing new centres entirely. We can’t rely on building more condos in Toronto, Montreal and Vancouver forever.

    • Woolsock 2 years ago

      It isn’t a bad idea. Care would have to be taken to ensure you don’t build ghost cities by accident, though, visa-vis the Irish “ghost estates” (slightly different context) left over from the Celtic Tiger years. Is anyone convinced we can be that careful in Canada?

  • Trader Jim 2 years ago

    This is the point. Who sells when prices are rising? They all rush for the exit when they stop which is what amplifies the movement both ways.

    • GTA Landlord 2 years ago

      Rent a place for $4k/month for 12 months less rent that’s lost or $4k/month through bad monetary policy. Golly gee whiz, I wonder what I care about more. LOL.

      Anyone that’s ever had a crap tenant knows you don’t want any of those suckers in the property anyway.

  • Doomcouver 2 years ago

    It’s nice to see some articles challenging the narrative that more supply will fix the issue. I’ve often maintained that supply issues seem to be a minor factor in general for most of the recent price-action of housing in Canada. If you crunch the numbers of housing formation vs housing completions, acceleration in house prices doesn’t seem to correlate to real supply problems at all.

    Trying to build your way out of an asset bubble can be dangerous. Once the speculative demand evaporates you can be left with a lot of empty houses that no one wants after the fact, and will worsen the asset crash. That’s what happened in 2008 to many countries like Ireland, Spain, USA etc.

    I’m not saying we shouldn’t have more supply, but if you’re just going to let speculative investors gobble it up, what’s the point exactly?

    • Lou Chao 2 years ago

      The last point is key. We can need more supply AND people are overpaying for it.

  • Dennis_K 2 years ago

    This appears to be a really great analysis on Mr. Kavcic’s part – it effectively destroys all those pleading the ‘supply problem’ mantra in respect of affordability, and even nullifies the recent Ontario Housing Affordability Task Force Report, which just said to simply ‘build more’, as well as others by the Smart Prosperity Institute.

    I really wish BD would provide a link to the document / research that Mr. Kavcic did — I can’t seem to find it online anywhere.

    • Bruno 2 years ago

      They email it to their commercial clients. I saw Rob Carrick sharing a screenshot on one a day in advance too, so I’m guessing some people get them early.

  • AT 2 years ago

    Increasing home values are the fuel that drives the Canadian economy and hides the reality of decreased productivity and a worsening economic climate. Reduced income due to COVID – HELOC. Problems funding your kids university – Refinance. Need a new car but no cash – same thing. The whole country is on side because 65% of Canadians are homeowners which provides cover for the politicians who have supported this bubble. In Canada just like the USA the top quintile of income earners drive the vast majority of consumption and GDP. The bottom group have so little to spend that it does not even reflect in the numbers.

  • Investor 2 years ago

    I always love Better Dwelling’s common sense analyses; however, fundamentals no longer count again in this age. Common sense makes you look like a loser these days. Sentiment rules.

  • Nigel 2 years ago

    You have to be either batcrap crazy or outright desperate to get into this market. The fundamentals do not apply

Comments are closed.