After the global financial crisis, the Canadian market experienced a modest correction and then shrugged it off. This was viewed positively politically as home prices were a very public barometer of how a country was doing, and that measurement approach became cemented in the minds of a generation. As home prices climbed higher it also became a source of wealth for many. With approximately two-thirds of Canadians owning a home, according to Statistics Canada, that provides a popular majority of people that like to see homes increasing in value.

High home prices, and mortgage service levels, also result in reduced consumer spending and investment. High home prices lead to increased debt, as people take out larger mortgages to afford homes, making it more difficult for individuals to save money, invest in businesses, or otherwise contribute to economic growth. In the a recent Angus Reid survey, more than half of Canadians said they couldn’t keep up with the cost of living.

Canadians devote more income to servicing debt than other major peers. This should come as no surprise when factoring in Canada’s high tax rates and record debt burdens. The question is where does the government expect investment in new business to come from as dollars go to servicing the existing debt burden, which is there because Canadians need a place to live. It’s difficult to blame people for wanting a backyard for their kids.

Over the past decade, Canadians were largely cautious about purchasing homes. The only time Canadians were given the all-clear to buy homes was just recently when Bank of Canada governor Tiff Macklem assured Canadian households and businesses that borrowing rates will remain at historic lows. The exact quote was as follows: “Our message to Canadians is that interest rates are very low and they’re going to be there for a long time.” This ironically preceded one of the fastest increases in rates on record and those that followed this advice now have much higher debt servicing costs. It’s tough to blame Macklem, as Canada must keep up with U.S. rate increases to avoid importing inflation. This was an impossible position for the Bank of Canada. But it’s hard to blame the average Canadian who thought they finally had the all-clear to purchase a home. Now they must try to manage the results of that decision.

Mark Le Dain is vice-president at Neo Financial Technologies Inc., a technology investor and adviser, and a published author.