Individuals are increasingly deterred from relocating because of the cost of living in major cities
High housing costs in Canada are preventing individuals from relocating to cities with better job opportunities, thus limiting the country’s economic potential and productivity growth, according to Aled ab Iorwerth (pictured), deputy chief economist of Canada Mortgage and Housing Corporation (CMHC).
The rising cost of housing has emerged as a barrier to population mobility, with an impact on job seekers and employers alike.
Recent studies show that even a modest increase of 1% in house prices within a destination city can lead to a more than 1% decline in the number of people willing to move there. This effect restricts the ability of workers to take advantage of higher-paying positions and stifles professional growth, reducing the vibrancy and economic development of major cities.
Ab Iorwerth highlighted that this issue is not only a personal concern but a broader economic one. Employers are being forced to offer higher salaries to attract skilled workers to locations with high housing costs, raising operational expenses and further hindering productivity growth. As a result, cities with high housing prices, like Toronto and Vancouver, are struggling to maintain their role as hubs of innovation and economic vitality.
“When choosing where to live and work, Canadians not only look at the wage increase they might get. They must be realistic about housing costs if they have to move to a new location,” noted ab Iorwerth. “And they may give up on opportunities given by a new job that improves their skills and knowledge — and hence the productivity of the country — if they can’t afford to cover the cost of housing after moving.”
Decreased population mobility
While cities like Calgary and Edmonton, which maintain relatively more affordable housing, have experienced faster population growth, other cities with soaring housing costs have seen a decline in movement. In major cities, the ability to draw diverse, skilled workers is a critical factor for growth, as clusters of industries depend on a steady influx of talent. When workers are priced out of these cities, it impedes overall productivity and economic dynamism.
The effects of high housing costs are also evident in cities’ efforts to accommodate growth, said ab Iorwerth. Without sufficient housing supply to match demand, rising prices push people away, preventing cities from reaching their full economic potential. Even within cities, high housing costs limit mobility, as workers may hesitate to accept positions in distant neighbourhoods due to expensive housing and long commutes.
“High housing costs also discourage Canadians from moving to expensive cities,” he noted. “Our cities end up smaller than they could be. Smaller cities mean less innovation, skills and productivity growth.”
The issue also affects the service industry, where high housing costs force workers to move away from city centres. This disrupts the broader ecosystem of services—from retail to healthcare—further diminishing economic vitality.
Ultimately, high housing costs not only make it harder for Canadians to find affordable homes but also impede job mobility, reducing the flow of skilled workers to dynamic cities. Iorwerth stressed that to ensure long-term economic growth, cities must focus on increasing housing supply and making homes affordable.
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