In fact, higher home ownership rates are strongly correlated with higher unemployment. Unemployment is very low in Switzerland (two to three per cent) where only one quarter of people own their homes. In Spain unemployment is high, recently 18 per cent, while three quarters of people own their homes. The same relationship can be found whether one compares countries in Europe, or states in the United States or regions within England.

On average, a ten per cent increase in the home ownership rate is associated with a two per cent increase in the unemployment rate. The relationship was first noticed by Dr. Andrew Oswald Professor of Economics and Behavioural Science at the University of Warwick, whose research lies at the borders among economics, psychology, social science and health.

Dr. Oswald believes that homeownership causes the increase in unemployment. When a home owner loses his job he looks for a new job within commuting distance of his house, whereas when a renter loses her job she looks for a job wherever she can find one, and then moves if she has to. As home ownership rates have risen, the average length of unemployment has risen, while the frequency of job loss has not changed much.

For the foregoing and other reasons, an ample supply of rental housing is positive for people and for the economy. In the 1950s and 1960s many rental buildings were built. However, starting in 1972 with the imposition of the capital gains tax on rental housing (but not on owner-occupied houses), and continuing with many other changes, the federal government changed the income tax regime with the result that rental development became uneconomic. In several provinces, rent controls became another reason not to invest in rental housing.

Governments across Canada should encourage rental development and rental uses of property. The key changes needed are to loosen or eliminate rent controls where they exist, and to reform the taxation system to make rental development economic again.