High housing costs are the top economic concern amongst Canadian business leaders despite recent price drops in many locations, according to Modus Research Inc.’s latest release.
Nearly 92 per cent of business owners surveyed said the cost of housing has had the most negative impact on the Canadian economy. Close follow-up factors included household debt, current interest rates and the current rate of inflation.
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“That’s interesting from a business point of view,” Charlie Graves, president of Modus, said. “If we go to the general public, they’ll put that right at the top of their list as well.”
Modus said housing costs have a significant impact on how businesses handle employees and costs, with 37 per cent saying they increased pay or benefits to assist employees with housing costs. The current housing situation has also increased the number of businesses relying on contract workers and hiring employees from outside their geographical region.
Most notably, six in 10 business leaders said increased prices within their business are a direct impact of housing costs. Graves said he found these results illuminating.
“What that says economically is that housing costs are really driving inflation beyond just the cost of housing, per se,” he said. “It’s causing employers to increase prices because there’s a fair number of them that are increasing earnings, wages and salaries to their employees as a result.”
Half the business leaders surveyed also said housing costs make it difficult to recruit qualified employees, which Graves considered a significant impact. More than a third said that has made it difficult to retain employees.
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Modus also said more than half the companies surveyed have provided greater flexibility for their employees to work from home. With ongoing back-to-office mandates being put in place across multiple private-sector employers, Graves said many are still allowing this flexibility, which is driven by convenience and cost savings for employees.
“I think a lot of people found that they could move out of the urban centre or inner suburbs and move further out. They discovered during the pandemic that it worked very well and wanted to maintain it,” he said. “There’s a lot of variability in how employers are actually handling work-from-home arrangements.”
Graves said the most pressing issue that needs to be addressed as a result of the survey is that different levels of government must address the cost issue.
He noted the federal government’s initiative on funding co-operative housing, but added there’s been barely any investing towards this type of housing during the past 35 years.
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“It’s not just simply a lack-of-supply issue,” he said. “There’s a huge amount of vacancies in some of the big cities right now, and prices are pretty sticky.”
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