Affordability issues in Canada's housing market could impact consumer spending: Economist

One chief economist said the lack of affordability in Canada’s housing market could potentially weigh on future consumer spending as households allocate more of their income to shelter.

Charles St. Arnaud, the chief economist at Alberta Central and a former economist at the Bank of Canada, said in an interview with BNN Bloomberg Monday that over the next few years, there will likely be increased pressure on housing prices. St. Arnaud said mounting pressure will also impact the rental market and stems from weak housing starts coupled with strong immigration. 

“That will have some very important implications for household finances because suddenly, while we always say households shouldn't pay more than 30 per cent of their income in shelter costs, at some point that might have to be thrown out the window,” he said. 

“That will mean that the average household has to spend more for shelter and that means they need to reduce spending on other parts of the economy…you will see underperformance in consumer spending.”