Policy-Making Through a Declustered Lens

Commentary
Canada’s public policies are built on flawed averages. Housing is a prime example. Since the 1960s, the national average ratio of house prices to after-tax income has more than tripled, from around 2.2 in 1965 to over 7.5 by 2024. At its peak in 2022, that ratio surpassed 9.0.
But these figures are heavily skewed. When adjusted to account for spatial concentration, we find that Toronto and Vancouver alone inflate the national average by several points. For example, housing in Thunder Bay still averages under $350,000, while in Toronto it exceeds $1.1 million. Yet both cities weigh equally in national policy metrics. The national average masks regional affordability and creates a false sense of universal crisis. When we layer in the rising share of income consumed by taxes, up from around 25 percent in the 1960s to over 43 percent by 2024, the picture becomes even more distorted. The public perception of housing unaffordability is not wrong, but the data used to define and respond to it is uncorrected for geographic bias. That’s a critical warning sign….