Business leaders pinpoint housing costs and supply as the economy's biggest risk, KPMG survey finds
Business leaders across Canada have identified the housing crisis as the principal threat to the nation's economy, according to a recent survey conducted by KPMG Canada and reported by The Canadian Press.
The survey, which polled 534 business leaders, revealed a staggering 94 percent consensus that soaring housing costs and inadequate supply represent the most significant risk to economic stability.
These leaders advocate for housing to be a primary concern in the forthcoming federal budget.
The challenges posed by the housing crisis extend into the business sector, with 87 percent of respondents acknowledging that their companies have had to increase salaries to attract and retain talent amid rising living costs.
“What we're seeing in the survey is that the businesses are needing to pay more to enable their workers to absorb these higher costs of living,” explained Caroline Charest, an economist and Montreal-based partner at KPMG.
She highlighted the broader economic implications of these increased wages, noting their contribution to persistent inflation and subsequently high interest rates.
Charest also pointed out the strain on household finances, exacerbated by high housing costs and interest rates, particularly as many already grapple with significant debt. This scenario, she warned, could lead to increased economic vulnerabilities, especially during times of economic downturn.
Moreover, the survey underscored the inflationary pressure exerted by high housing costs, complicating efforts to reduce inflation to levels that would allow for interest rate decreases.
The housing crisis's impact on businesses and their ability to attract skilled workers has been a growing concern, as echoed by a report from the Ontario Chamber of Commerce last year.
To address this issue, nearly 90 percent of the businesses surveyed expressed a desire for increased public-private collaboration.
“How can we work bringing all stakeholders, that being governments, not-for-profit organizations and the community and the private sector together, to find solutions to develop new models to deliver housing,” Charest said, reflecting the strong call for cooperative solutions identified in the survey.
While the federal government has initiated several funding support measures for other government levels and introduced incentives like a GST rebate for rental housing construction, its direct influence over housing remains limited.
Efforts include linking federal funding to provincial and municipal strategies that could enhance housing supply.
The survey also showed broad support among businesses for tax measures aimed at improving housing affordability, such as making mortgage interest tax deductible. Nonetheless, there's a consensus on preserving the capital gains tax exemption for primary residences.
Conducted in February using Sago's Methodify online research platform, the survey participants ranged from business owners to executive-level decision-makers, spanning a wide spectrum of company sizes and revenue brackets.
