2024 Drivers of Change

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At a glance:

  • Rising rent and home prices (plus low supply) are driving housing options out of reach for many low- and middle-income households.
  • We’ve interviewed two leaders in housing policy and development - Nick Walkley (UK President, Avison Young) and Vic Gupta (CEO, CreateTO) - to discuss the current and future state of housing solutions in their markets.

Housing costs, supply, and the road ahead for cities

We are all feeling the pressure from the intensifying global housing crisis as rents continue to soar, homeownership seems further out of reach, and there never seems to be enough supply to fit the ever-growing demand.

Recent data highlights the ongoing challenges across income levels, extending beyond the commonly voiced struggles with social – or government-subsidized – housing. Notably, in the U.S., multi-family housing rents surged by 19.2% since 2019, peaking in Q2 2023, while Canadian rents increased by 9.9% year-on-year in November 2023. In 2022, more than 50% of U.S. households were rent burdened – or spending over 30% of household income on rent.


This figure illustrates the percentage of American households spending over 30% of household income on rent from 2010 through 2022.
Source: AVANT by Avison Young, U.S. Census Bureau

The housing crisis is not limited the ongoing shortage of social housing as many major cities are facing severe hurdles in meeting the attainable housing needs of low- and middle-income households.

However, it isn’t just rents that are rising, house prices are following suit. Between 2012 and 2022, the house price to income ratio rose by 26.7% in the U.K. And the U.K. sits on the lower end of the spectrum. Canada’s price to income ratio rose by 52.3% in the same period.


These figures reflect the percent change in the house price to household income ratio from 2012 to 2022. Source: AVANT by Avison Young, OECD

Rising interest rates and worsening mortgage rates are adding to the struggle to buy a home, prompting many home-seekers to reconsider renting as a more feasible option. Against this backdrop, our CEO Mark Rose’s recent World Economic Forum agenda article emphasizes key ingredients for addressing the crisis, including the necessity for sensible density policies, community empowerment, alternative incentives provided by the public sector, and sustainable infrastructure development.

This is a challenge that can only be addressed through action from both the public and private sectors. To examine these ideas further, we have asked two leaders in housing policy and development to share their view of key moves toward solutions.

“Housing is essential, decentralized infrastructure; as fundamental to economic growth as roads and water, yet elsewhere on our balance sheet and too often treated as a nice-to-have on the side. It is going to take vision, long-term funding, and subsidies to address, but it is an investment that should pay back in the long term.”

- Nick Walkley, president of the UK offices at Avison Young and previously Chief Executive of Homes England, the UK Government’s land, development, and housing investor

headshot of Nick Walkley, president of the UK offices at Avison Young

1. Nick, with a general election approaching in the UK, what is the discourse on housing, and are all eyes on government for solutions?

Well, when employers are making decisions based on housing, and the workforce a city depends on can’t live in that city, you’ve reached a crisis point. There is a groundswell across sectors and political opinions that something must be done—about affordability, quality, and supply.

With elections coming, we are seeing calls like the manifesto issued by the British Property Federation to get us back to first principles, starting with the understanding that housing is an essential part of the UK economy. It is easy to slip into blaming the government and to focus on the role of regulation and planning. But moving the dial on housing means looking at funding and infrastructure, and more generally, taking a broader view of what the government could and should do to ease the housing crisis.

2. Can you share more on what that way forward might include?

There is evidence that better regulation, such as simplifying our planning system, will improve supply. Increasing supply, however, does not change the fact that housing is a market-driven product. We have to change the nature of the market. In other sectors of society, we've seen profound shifts in the market in terms of product and delivery model, as well as supply (EV cars being the latest), but UK housing is not all that different than it was 100 years ago. How might market diversification and a more competitive landscape for supply, financing, and construction naturally transform housing supply?

For me, this is an interesting space to be in. If we can help de-risk innovation and advise on regulation that encourages small-scale risks, then we can help nurture a better market and stronger path for new ideas to scale.

3. Any ideas you’d start with?

I mentioned EV cars earlier, look at the level of bespoke production and customization possible—and not just at the factory, but in the various ways you can drive that car immediately off the garage lot. You can own, you can never own, you can adjust payments, servicing, and who handles repairs… what I see in this sector is a transformation in what ownership looks like.

4. Ownership feels like an immovable force in housing. Are you saying this needs to change?

Homeownership, particularly in the UK, is seen as the financial security blanket. It’s a scarce product that has increased in value, and it’s deeply embedded in the English psyche. This has diminished the need and appetite in the market for at-scale rental product because anyone with capital has been systemically steered into a mortgage or even a second mortgage as a nest egg. Mom-and-pop landlords with varying standards have so dominated the market that professional build-to-rent remains a tiny proportion of supply and barely warrants much mention in planning documents.

However, post the financial crisis we are now seeing change and a demand for better rented homes. Major UK Cities are seeing purpose build-to-rent become part of a mixed housing offer. Students who experienced improved branded private sector accommodations on offer as a result of the rapid investment in and growth in that asset class, now have jobs, and in leaving university housing, and found nothing of similar quality available in the market. That younger professional population is driving demand for quality build-to-rent, rather than being left at the mercy of amateur landlords.

So we see signs of a growing but still relatively narrow market. But it is one that is still largely viewed as an interim choice, so we have a way to go to support long-term renting as a part of wealth building as we see in Germany and continental Europe. Paying over half of a salary to rent in London is brutal and reinforces the failure in supply and the challenge of financial stability and renting. The solutions will be in increasing supply but also in personal investment products that provide the same perceived future security and value that home ownership offers.

5. Regarding supply failure, the other immovable force seems to be density, land, and Nimbyism. Is this in the discourse?

It’s not just in the discourse, it dominates. We see this played out in debates around individual schemes and applications, and also in terms of theoretical discussions about what we should build, where, and for who. While NIMBYISM isn’t new, what is clear is that debates are becoming increasingly viewed through the lens of generational differences, pitching cash-strapped under-housed younger generations against more comfortable Boomers. But I don’t think NIMBYISM is immovable. The severity of need seems to be top of mind and the failure of housing supply is now a collective agenda topic, whether it’s at the dinner table or in public debate. We also need to keep demonstrating that dense urban development is more sustainable than sprawling suburban development.

The great news is the government owns plenty of land, has planning powers, and can (and should) lead the market. Bold and deliberate interventions, like new towns, enable us to reimagine infrastructure, impact the housing market at scale, and prove out planning strategies that successfully grow the economy while addressing a range of housing, livability, and sustainability challenges.

We need to keep reminding ourselves that this is a crisis and that addressing it needs innovative partnerships, a competitive marketplace, bold investment, and planning from the government—with housing it is feeling a bit like everything everywhere all at once, but that is what is going to take to turn the dial.

“What we are most proud of is the fact that we aren’t just building housing, we’re building complete communities. We take a very strategic approach to development, one that grows the vibrancy of the city. Our purpose at CreateTO is to build a city we love and that’s a city where people can live, work and play.”

- Vic Gupta, chief executive officer of CreateTO, the City of Toronto’s land and real estate corporation

headshot of Vic Gupta, chief executive officer of CreateTO

1. Vic, can you provide some insight into the mission of CreateTO and the role you play in serving the City of Toronto?

The City of Toronto owns one of the largest, most complex and valuable real estate portfolios in North America, including more than 8,400 properties with a collective value of approximately $27 billion.

In 2018, CreateTO was founded to manage this portfolio differently: as a collective asset belonging to the people of Toronto. Our agency operates on the understanding that Toronto real estate can unlock great value for city residents and be creatively re-imagined as the building blocks of Toronto’s future.

2. CreateTO plays a crucial role in the execution of Toronto’s Housing Now plan. What sort of financial mechanisms are needed to drive this plan forward?

Housing Now is a key housing supply program that supports the City’s HousingTO 2020-2030 Action Plan target of approving 65,000 new rent-controlled homes over the next 10 years.

City Council has approved approximately $40 million in land value and financial incentives through the Housing Now Initiative alone, including a waiver of fees and charges and an exemption from property taxes, to make these projects possible.

In terms of the bigger picture, the City has committed approximately $2 billion in land value, capital funding and financial incentives towards supporting delivery of the 65,000 rent-controlled homes.

3. How is CreateTO using a systems approach and public-private partnerships to address these housing goals?

For CreateTO, capacity building is key to meeting the new goals. We have a high level of confidence in our ability to review our large real estate portfolio to identify sites, and to be innovative with co-location, combining capital investments with partnerships to create new opportunities. It is the next steps in the development process where we will build our expertise and capacity.

What is important here is to recognize that to achieve our housing goals there needs to be an “all hands-on deck” approach. The answer to this problem doesn’t begin and end with government. We recognize the importance of the private sector as well not-for-profits and Co-ops as partners in the path forward.

Real estate has never been a policy area where you can snap your fingers and make something happen. It is a long road even when you have a row of green lights in front of you.

4. How does the co-op model in the 2444 Eglinton project support your approach to access and ownership, and what are key reasons this structure is the right fit?

Co-operative housing is a perfect structure to be included in this location because it provides for the largest number of affordable rental housing units in close proximity to the major public transit investments being made at the Kennedy mobility hub. A co-op rental housing development of this size has also not been constructed in the province in more than 30 years and we are excited about the opportunity to spearhead bringing co-op housing back into the forefront.

A key consideration for this structure is the fact that the non-profit model provides for long-term affordability because residents won’t have to worry about excessive rent increases.

This doesn’t mean that rents won’t increase. Rents increase regularly as operating costs increase. But the difference is that co-op members review the finances of the co-op and budget recommendations of the Board of Directors and members vote on the budget at an annual general meeting. So, if there are increases, they reflect true costs, not profit margins.

rendering of 2444 Eglinton 2444 Eglinton will deliver approximately 918 homes including 612 rent-geared-to-income (RGI), affordable and market rent-controlled co-operative homes.

5. Market rate housing plays an important role in the overall funding strategy for housing in Toronto. How do you help communities understand (and trust) the approach to meeting demand at all levels?

Market rate units are an important part of the equation not only from a diversity perspective but from an economic one. The market rate units enhance project viability through cash flow to repay debt and fund on-going maintenance expenses.

Increasing market rate housing in Toronto is also a priority for Mayor Olivia Chow. The mayor made a commitment to build 25,000 rental units, and that figure includes market rate housing. However, there is a particular focus on delivering market rentals over market ownership units.

The goal is to build complete communities which include housing at various income levels and trust is built within those communities through meaningful engagement and consultation.

Finding the way forward

The challenge to house our ever-expanding global population could only become more difficult. We are currently facing the reality that the nature of our housing markets may not support our development needs, which can be an overwhelming pill to swallow.

However, in the midst of our systemic challenges, there are projects – such as CreateTO’s 2444 Eglinton – that demonstrate the power of an innovative, public-private approach to improve our housing supply. Could projects like this hold the key to meeting critical demand for both home rental and ownership needs?

It’s worth considering, as a mix of creativity, partnership and alternative housing models alongside traditional definitions of homeownership could be just what our communities need to meet changing landscapes and times.

For more information, contact:

  • Principal and UK President
  • Strategic Consulting

  • Regional Manager, Insight
  • Research

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