Rising house prices pushing out young people, economist says
There are consequences when young people are pushed out of cities, warns Scottish economist Duncan MacLennan
If home ownership rates among young people plummet, cities could face severe consequences, a Scottish economist warns.
Duncan MacLennan, a professor at the University of St. Andrews, Scotland, who researches international housing policy, is in Vancouver to present at the Re:Address conference on housing affordability.
MacLennan said it is getting much more difficult for younger people in many cities around the world to purchase their own homes, including Vancouver.
"Young people are being deterred by these high house prices and saying, 'we'll go somewhere else, thanks very much,'" he said.
If young people leave the cities, he said, economic growth could become "somewhat sluggish."
"Younger couples who are both skilled and innovative at being in labour markets ... are the drivers of success in dynamic cities like Vancouver ... and a really important driver of productivity," he said.
When house purchases get deferred, MacLennan explained, there will be less money spent on other important household expenditures in later life stages like children's university fees and family weddings.
"It will have a negative effect on the general expenditure in the economy."
One solution some young people are already relying on is the equity that has been built up by their parents or grandparents, MacLennan said, but this is creating deep imbalances.
"What happens for the kids who work hard, study hard, are doing well but don't have any parental support? Social mobility will get really eroded by that," he said.
Instead, he said rent-to-own programs and provincial schemes to help pay deposits could help first-time homebuyers.
Broadly, MacLennan said Canadian municipalities need to take charge of housing policy, especially since cities add so much tax revenue to the provincial and federal governments.
"You're relying on these [provincial and federal] orders of government putting money back into the system, and quite frankly, they've failed to do that for quite a long time," he said.
The Re:Address conference takes place in Vancouver Oct. 24 - 29, 2016.
With files from The Early Edition
To hear the interview, click on the link labelled Scottish professor Duncan MacLennan on young people and home ownership