Canadian business leaders have many concerns about the economy but housing costs top the list. Despite housing costs softening over the past two years, The Business Monitor reveals that it is viewed as having the most negative impact on the Canadian economy.
Key findings in this release:
- Housing costs top the list of economic concerns.
- High cost of housing is affecting how companies handle employees and costs.
- Based on what business leaders are saying, the high cost of housing is driving inflation.
The cost of housing is nearly universally considered a drag on the Canadian economy.
Business leaders were asked to rate the impact of a number of important factors on the Canadian economy. Nearly all say that the cost of housing is having a negative impact on the Canadian economy. Household debt is not far behind, as a widely held concern.
Interest rates, inflation, and federal debt continue to be seen as drags on the economy in nearly equal measure. While less important, Canada’s foreign policy and climate change are viewed by a majority of business leaders as having a negative impact as well.
In short, Canadian business is very concerned about a wide range of factors affecting the economy with housing cost at the top of the list.
Housing costs are having a significant impact on how businesses are handling employees.
While the pandemic initially drove increased flex arrangements with employees working from home, housing costs are pressuring employers to maintain that flexibility. The Business Monitor finds over half continue to provide WFH flexibility due to the high cost of housing.
The high cost of housing is also:
- Driving up employee costs.
- Creating greater reliance on contract workers.
- Forcing employers to hire from locations outside their normal geographic area.
Housing cost is, according to business leaders, a significant driver of inflation.
Almost 6 in 10 say they have increased prices as a direct result of the impact of housing costs.
- Half also report that housing costs make it more difficult to recruit qualified employees.
- Over a third say it is making employee retention more difficult as well.
These results suggest that Canada’s housing market is having a major economic impact.
Discussion
While home prices in most markets in Canada have fallen significantly from the frothy heights of the pandemic, rents have escalated unabated. Canadian business leaders see the continued high cost of housing as having a major impact on the economy.
It is driving inflation, requiring ongoing flexibility in work arrangements, and making it more difficult to recruit and retain employees.
As we detailed from our public opinion research, Canada’s inflated housing market is having a major impact on Canadians’ financial well-being. What The Business Monitor now shows is that it is also having a large impact on businesses and the economy.
Methodology
These results come from the latest edition of The Business Monitor which is powered by the Modus Business Panel – the only purpose-built, 100% probability-based business panel in Canada.
Because the Modus Business Panel is built entirely using random probability sampling, it is valid to cite the margin of error for this survey. The survey is based on a representative sample of 652 Canadian enterprises and has a margin of error of +/- 3.8% points, 95 times out of 100. The survey data was collected from August 29 to September 16 and is weighted by enterprise size and region based the latest Statistics Canada data.
