The CD Howe Institute has released a new study on how excessive land-use restrictions and planning barriers are driving up the cost of Canadian housing:
In any competitive market without barriers to entry, regardless of the product being sold, the overall market price should equal its marginal cost of production. The same is true of housing. The marginal cost of constructing a single-detached house is primarily due to the costs of labour, materials, and time during its physical construction. A well-functioning housing market results in the market price of housing being close to the feasible cost of constructing it. If prices persistently exceed this construction cost, it is often due to barriers that inhibit new construction. These barriers often stem from excessive regulations.
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
