TORONTO – Business leaders see the housing crisis as the biggest risk to the economy, a new survey from KPMG Canada shows.
94 percent of respondents agreed that high housing costs and a lack of supply are the biggest risk and that housing should be a key focus in the upcoming federal budget. 534 companies were surveyed.
87 percent of respondents agreed that housing issues are forcing companies to increase wages to better attract talent and factor in higher labor costs.
“What we see in the survey is that companies are having to pay more so that their employees can absorb these higher living costs,” said Caroline Charest, an economist and Montreal-based partner at KPMG.
The need to pay more not only directly impacts corporate finances, but also makes it harder to contain inflation that keeps interest rates high, Charest said.
High housing costs and interest rates are putting a strain on households already suffering from high levels of debt, she said.
“This leaves household balance sheets more vulnerable, particularly in a time of economic downturn. This creates vulnerabilities in the economy.”
Higher housing costs are themselves a big factor in inflation, which also makes it harder to reduce the measure to allow for lower interest rates in the future, she said.
Companies have been sounding the alarm for some time.
A report released last year by the Ontario Chamber of Commerce also highlighted how the housing crisis is affecting how well companies can attract talent.
According to the KPMG survey, almost 90 percent of companies want greater public-private collaboration to help resolve the crisis.
“How can we work to bring together all stakeholders, governments, nonprofits, community and private sectors, to find solutions to develop new models for housing delivery,” Charest said.
“Our survey of companies showed that pretty well.”
The federal government has worked to provide more financial support to other levels of government and introduced measures such as a GST rebate for rental housing construction, but has limited direct control over the file.
The story goes on
Part of the federal funding is to tie funding to actions that provinces and municipalities are taking that could help improve care.
The vast majority of KPMG survey respondents supported tax measures to make homeownership payments more affordable, such as making mortgage interest tax deductible, but also want to maintain the capital gains tax exemption for a primary residence.
The survey of companies was conducted in February using Sago's online research platform Methodify. The respondents were business owners or executive-level decision makers.
About a third of the top performers are companies with sales over $500 million, about half have sales between $100 and $500 million, and the rest are below that.
This report by The Canadian Press was first published March 27, 2024.
Ian Bickis, The Canadian Press
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