Hous­ing short­age ‘clas­sic sup­ply and de­mand’

Kingston Whig-Standard - - FRONT PAGE - EL­LIOT FER­GU­SON elfer­gu­[email protected]­media.com

The chal­lenges fac­ing the city’s hous­ing mar­ket are symp­toms of an im­bal­ance, a pair of Queen’s Univer­sity busi­ness pro­fes­sors said.

Busi­ness pro­fes­sors Evan Dudley and Ken Wong told guests at the an­nual busi­ness fore­cast lun­cheon on Thurs­day that high de­mand and low sup­ply are com­bin­ing to push the cost of hous­ing up and its avail­abil­ity down.

“It’s clas­sic sup­ply and de­mand. There has been a shift in de­mand and it has pushed prices up,” Dudley said.

“We’ve seen sus­tained eco­nomic and pop­u­la­tion growth over the past four years. That’s great, new busi­nesses come in, but what that has done is put up­ward pres­sure on home prices and down­ward pres­sure on rental va­cancy rates,” he added.

Kingston’s rental va­cancy rate in 2018 – 0.6 per cent, ac­cord­ing to a study re­leased last week by the Cana­dian Mort­gage and Hous­ing Cor­po­ra­tion – is the low­est in On­tario and an all-time low for the city, Dudley said.

The 10-year av­er­age for rental va­can­cies in Kingston is 1.6 per cent, more in line with the provin­cial av­er­age of 1.8 per cent.

“Why haven’t build­ing per­mits ad­justed for this low va­cancy? You would ex­pect de­vel­op­ers to come in and cre­ate more sup­ply to re­spond to this in­crease in de­mand. We haven’t seen that yet, so that gets trans­ferred into prices.”

The sup­ply short­age is, in part, a re­sult of a lack of on which to build, Wong said.

“There’s just a smat­ter­ing of lots avail­able that are ser­vice­able at a rea­son­able price, and so even if you start to ex­pand the sup­ply, the sup­ply will come in at higher prices just be­cause land isn’t avail­able and the cost of de­vel­op­ing those prop­er­ties, mak­ing them ser­vice­able, is very high,” he said.

The lo­cal mar­ket is also be­ing driven by an in­flux of se­niors from mar­kets such as Toronto and Van­cou­ver, where prices are much higher than they are in Kingston, Wong added.

Wong said build­ing taller build­ings with more res­i­den­tial units may be needed to meet the city’s hous­ing needs.

“You al­most have to make a de­ci­sion as to how much you are will­ing to trade off height and in­ten­si­fi­ca­tion for the eco­nomics and avail­abil­ity of hous­ing,” he said.

EL­LIOT FER­GU­SON/THE WHIG-STAN­DARD

Queen’s Univer­sity busi­ness pro­fes­sors Evan Dudley, left, and Ken Wong tak about the city’s hous­ing short­age at an­nual busi­ness lunch on Thurs­day.

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