[Surging Food Prices Spur Nigeria to Declare a State of Emergency](/surging-food-prices-spur-nigeria-to-declare-a-state-of-emergency-1.1945757) 2h ago Higher rents, housing costs to hinder future success of large Canadian cities: Economists BNN Bloomberg, The inverted yield curve indicates a recession is coming: Gavin Graham The latest round of interest rate hikes in Canada is likely to send the costs of rent and housing even higher, and as people battle with affordability, large cities could very well feel an economic blow, economists say.As of Wednesday, the Bank of Canada’s overnight lending rate has risen to 5.0 per cent .The speed at which the BoC has raised rates to temper inflation is likely to slow the construction of new homes — making Canada’s housing shortage worse , experts warned.In this environment, economists are arguing that high shelter costs, such as soaring rent, will push workers out of large Canadian cities and slow the country’s future economic success.“When housing becomes unaffordable, people are forced to move further from larger Canadian cities and this often has a direct impact the success of those economies,” Stephen Brown, senior Canada economist at Capital Economics, told BNNBloomberg.ca on Thursday.Not every company can afford to pay people top wages to live in metropolitan areas like Vancouver and Toronto, and so, the normal start-up business model (lower salaries but potential high future equity compensation) becomes less likely to attract and foster talent in these cities, potentially harming innovation, he explained.
“Companies can choose to locate their headquarters into smaller Canadian markets, but it’s not guaranteed that they will get the highly skilled employees they are looking for — this has an overall drag competition,” he added.There’s also the reality that immigrants will turn away from Canada amid the heightened cost of living, he cautioned.“Should immigrants choose to leave, or not come to Canada, because of the living expenses then that will have long lasting consequences on the country’s economic future,” he noted.The trend of people leaving large Canadian cities is already being seen in interprovincial migration data, Charles St-Arnaud, chief economist at Alberta Central, told BNNBloomberg.ca in a phone interview on Thursday.“What we’re seeing in the data is people moving out of Ontario and B.C.simply because they can’t afford to live there,” he said.
Along with the issue of unaffordable housing, Canadians just can’t spend as much on other items when they have to pay so much for shelter, he added.“Higher rent, or housing prices, mean that people have less money to spend on other things— which in turn brings down economic growth,” St-Arnaud said.He also pointed to the risk of a decrease in global investment.“Companies always factor in the cost of living in a country prior to opening up an office there, and with Canada, it is getting harder to justify paying people elevated wages to secure their housing costs,” he explained.
Corporations can just pick a different part of the world to do their business, he added.“These trends are enough to hinder the economic success of large Canadian cities,” Arnaud said..
