Things may only get worse if economic and business closures drag on, officials say
The impact of the COVID-19 pandemic on the housing market, and especially on long-term purchasing power, will be more pronounced the longer business closures drag on, according to provincial officials.
This will be especially apparent in the largest markets like Ontario, according to Peter Weltman, the province’s financial accountability officer.
In Toronto alone, 61% of small businesses might have to permanently shut down within three months, a recent survey by the Broadview-Danforth Business Improvement Area has found. Only 28% said that they can pay their rents for this month in full, while 38% said that they wouldn’t be able to fulfil their May rent payments.
The coronavirus has affected the livelihoods of around a third of Ontario’s workers, Weltman said. Around 1.1 million have lost their jobs, while another 1.1 million are now labouring under severely reduced hours.
“It’s awful,” Weltman said in an interview with BNN Bloomberg. “But it’s not surprising, really. This is different from the typical recession. This is a recession where the economy was effectively shut off by the government.”
Ontario lost 689,200 jobs in April alone, while the unemployment rate spiked to 11.3%, its highest point since 1993.
“Anything that delays a reopening of the economy will have more lasting economic impacts,” Weltman said. “The longer people go without work, the longer businesses go without cash flow, they become more in danger of shutting down permanently. So these are the sorts of things that hopefully can be avoided.”
