Canadian homeowners are getting richer, while renters are getting poorer, says A Tale of Two Canadas, a report from the University of Toronto. The gap is widening by about one per cent per year and without government intervention, fewer renters will be able buy houses in the future, the report says. It also warns that homelessness and poverty will increase.

"There are two very different types of Canadian households in terms of income and wealth -- and housing tenure represents the divide between the two, says Professor J. David Hulchanski, director of the Centre for Urban and Community Centres at University of Toronto. "The gap between owners and renters, in terms of both income and wealth, has grown over a 15-year period. The quality of the housing and of the neighbourhoods they live in has also changed."

Between 1984 and 1999, the income and wealth of Canada's homeowners increased from 29 times to 70 times that of renters. In 1999, homeowners had almost double the income of renters, says the report.

"Our study looks at the most expensive necessity and it's clear that one pool of consumers is chasing the other pool out of good quality housing," says Hulchanski.

The report says Canada's population is becoming more polarized by income and wealth than in the past, which has serious implications for rental housing supply. A thriving supply/demand market exists in the home ownership sector, but only demand and social need -- without new supply -- exists in the rental sector, says the report.

"The gap between the incomes and wealth of owners and renters means that more and more renters are lively to have severe problems remaining housed. Canada's housing system has no mechanism to ensure that their need for adequate housing is met. Families are the fastest growing group among the homeless, mainly because of a lack of affordable housing. This trend is likely to continue until much more housing at lower rent levels becomes available."

Hulchanski blames the situation on the government, which currently has no national housing policy. The federal government has not provided new social housing for low- and moderate-income renters since 1993, and provincial governments have also cut back on social housing.

About five per cent of Canadians live in non-market social housing. In Europe, Hulchanski says, the average is about 20 per cent. He says countries such as the Netherlands, Germany and the United Kingdom provide a rent supplement or fund public housing, and that the income and wealth gap between owners and renters in Europe is about half as large as in North America. "These are successful Western mixed economies and they can afford it," he says. "The (Canadian) federal government now has a huge budget surplus, so we can certainly afford to do a lot better."

He says: "We must recognize that very few renters have enough income to cover the cost of housing. Right now, we're passing the buck, saying the private sector will do it -- but it's not happening."

The lower incomes of renters also means that fewer of them will be able to become homeowners in the future. About 40 per cent of all Canada's renters live in the high-cost housing markets of Toronto, Montreal and Vancouver. Homeowners in those cities benefit from the increasing cost of housing, as the equity in their homes increases. But it's the opposite for renters -- because of the high cost of renting in those cities, it's difficult to accumulate assets to be able to afford a down payment.

The existing government programs geared to home ownership, such as tax-exempt savings plans and Ontario's waiver of land transfer taxes, do not address the needs of the renters, says the report. It suggests that social policies and traditional income assistance programs, such as social assistance, unemployment insurance and disability pensions, must better address the growing income inequality between owners and renters.

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