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Todd Whitcombe: Home prices have risen much faster than inflation

Wages and prices have not tracked for everything. The housing market is the prime example.
A wood-framed home under construction

I started working in 1972 for the lordly wage of $1.15 per hour. That was the minimum wage back then but it certainly doesn’t seem like a lot of money now. After all, you can’t buy a cup of coffee for that price any more.

At the time it was a suitable minimum wage for someone in high school. A gallon of gas – 4.5 litres – was 50 cents or 11 cents per litre.

I could fill the tank for five bucks or about five hours of work. A litre of gas represented 1/10th of my hourly wage. Up until a few months ago, the price of a litre of gas in Prince George was less than 1/10th of the hourly minimum wage.

It is only over the past six months that the prices have skyrocketed and reached the levels found in other countries. For example, during my year in New Zealand, I was paying a $1.70 per litre and that was pre-pandemic when gas prices here were about $1.20 per litre. Of course, in New Zealand, you really don’t have long distance drives.

The cost of other necessities has mostly tracked wages.

Looking at old grocery flyers from the 70s, you can find three quarts of milk for 35 cents or about 10 cents per litre. Again, that is about one tenth of minimum wage at the time and, on that basis, milk should now cost about $1.50 per litre.

However, wages and prices have not tracked for everything.

The housing market is the prime example.

My parents bought their house in Vancouver in 1961 for $15,000 which was the equivalent of three years salary for my father.

You can’t find a livable house now in Vancouver for three times a middle-class earner’s salary. 

The median after-tax income for Canadian families was $66,800 in 2020 according to Statistics Canada.

What sort of house could you afford for three times that salary - for just $200,000?

Inflation in housing started in the 1980s and successive governments – both Liberal and Conservative – have done nothing to address the problem.

So, when Pierre Poilievre tries to lay the blame on the Liberals for unaffordable prices, remember his party didn’t solve the problem either when they’ve been in power. 

P.S. And if the NDP, the Bloc Quebecois, the Green Party, or anyone else had formed government since the 1980s, they likely wouldn’t have been able to do anything about the increases in house prices. After all, they are driven by the consumer demand and not controlled by regulation.”

Todd Whitcombe is a chemistry professor at UNBC.

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