The Greater Toronto Area’s population is increasing and thus home prices will only go up has been said too many times to count. The logic being that we can not accommodate for the coming growth and thus demand will outpace supply. Unfortunately for believers in this population growth theory, GTA municipalities have and continue to work to accommodate growth. In fact, they have actually over accommodated for it, with housing development beating population growth for over a decade now.
In 2006 the province released its Places to Grow growth plan for Ontario’s greater golden horseshoe area. The area essentially covers the western end of Lake Ontario from the GTA through Hamilton and into the Niagara region. The document was designed to advise municipalities on how to manage the coming growth and set out to achieve higher levels of density in the region. The growth plan included estimated population targets from 2006 to 2031 (it has since been updated to extend to 2041) that can now be used to compare against given the 12 years that have passed.
The chart below compares the 2011 forecast versus the actual populations that were realized according to the 2011 census. Unfortunately, the forecasts are every ten years in the growth plan, meaning 2016 did not receive formal forecasts. However, if we use 2016 as a mid-point to the 2021 forecast we can divide the forecasted growth between 2011 and 2021 in half to make a 2016 estimate.
|2011 Populations||2016 Populations|
The reality is that not a single municipality in the GTA or Hamilton has achieved the growth that was forecasted by the province and planned for by city councils across the region. More interesting, the growth rates in the GTA are slowing. From 1996 to 2001 the GTA and Hamilton grew by 9.3%. Over the next five years that number came down slightly to 8.8% growth, followed by 8.5% during the five years after that. From 2011 to 2016, however, the growth rate dropped even further to just 5.8%. This is to say while the GTA is growing, it is not growing at the rate that was anticipated and seems to be slowing.
Population growth of any kind would be a strain on the housing market if no new homes were being added, so we need to also examine the housing growth during this period. Since 2001, the percentage growth of new dwellings in the GTA and Hamilton has consistently outpaced the percentage growth of the population. The graphs below show the percentage increases over the five year period for both populations and the number of dwellings in GTA municipalities and the region as a whole.
In the 15 years captured by the graphs, only Halton region’s development failed to outpace population growth. Overall, the GTA has been consistently providing more housing developments than residents to fill them. The city of Toronto in particular supplied a far higher percentage of new homes on to the market than people moving to the city. In York region, just as prices were sorrowing from 2011 to 2016, the amount of new development was easily eclipsing the population growth.
The argument can be made that the wrong types of units are being made, that too many condos units are coming on to the market instead of detached homes, and that may be ture; however, you can not say the population growth has not been accounted for in the housing market’s supply chain. In direct comparison we can see that more than enough homes are being added to the market.