Via The Globe and Mail: OECD report highlights Canadian inequality. Excerpt:
Canada is becoming a country of growing inequality – in housing, wealth and between the oil-rich West and the rest of the nation.
That is the sobering conclusion of a massive report on the Canadian economy released Wednesday by the Paris-based Organization for Economic Co-operation and Development.
The report raises a series of red flags for Canada, highlighted by home prices and rents that are increasingly out of reach for too many Canadians, particularly in Vancouver and Toronto.
“The point of the whole commentary is that it is not just about income [inequality],” OECD Secretary-General Angel Gurria said in an interview. “It is about income, yes, but it is about health, education, job opportunities. It’s really about inequalities, plural.”
Mr. Gurria told reporters that the OECD’s assessment of the Canadians economy is about “as good as it gets” in the postfinancial crisis era.
Significant challenges remain that have not been addressed, he said.
Nearly 40 per cent of Canadians now live in cities where house prices are “seriously or severely unaffordable,” based on international comparisons of home prices and median incomes, the OECD said.
Home prices in Vancouver, for example, are now more expensive relative to incomes than in every major city in the world except Hong Kong. Toronto is pricier than New York and Tokyo, and just narrowly behind London.
“A shock to even one segment could have spill-over effects to the broader economy if banks respond by tightening credit significantly, or if negative wealth effects depress consumption,” according to the 136-page report, conducted every four years in each of the OECD’s 34 member-countries.
Forty per cent of renters and 20 per cent of home owners now spend more than 30 per cent of their pretax income on shelter – a key threshold of affordability.