Political parties tackle the crisis of affordable housing

News analysis

Political parties may disagree very much, but one general consensus is that Canada has a crisis of affordable housing. However, the country does not have a universal national housing market, some of which have not been ridiculously affordable overnight. This represents a complex plight that has become important in the campaign.

Against this background, analysts can see the impact of implementing national housing policies and point out that the role the federal government must play is controversial. ..

The Liberty Party, the Conservative Party, and Net Domestic Product all decided to build new homes, introduce taxes to foreign buyers and vacant homes, and at the same time establish measures to make home ownership easier. I am planning.

Wendelcox, an urban policy expert at the Frontier Public Policy Center, believes that the approach proposed to encourage homeowners could worsen the housing market. Puzzled In the short term.

“Demand measures are likely to backfire,” he told The Epoch Times.

Cox emphasized that excessive rises in home prices are due to states that limit home construction to certain areas.

“When the state government imposes a’green belt’on the entire metropolitan area, it poses a serious problem,” he said, leaving urban home prices surrounded by such elongated lands undeveloped. He said it tends to be used in agriculture, whether it is or not. It rises much faster than the price in places without a green belt.

Therefore, Cox says there is really little that the federal government can do to solve the affordable problem, other than pressure the state authorities to not limit land use in this way.

“When home prices allow runaway in the market, you’re also making people poor,” he said.

Collateral damage

Given that the Bank of Canada lowered key interest rates to record lows, a surge in housing demand and a deficit in the real estate market were expected. 0.25% of March 2020 And during the pandemic, the federal government provided sufficient financial support to households. Stephen PolozHe oversaw the extraordinary behavior of the then Governor of BoC, said Earlier this year Such a result was an acceptable trade-off to prevent greater financial damage.

As more people work at home and need more space, the pandemic itself has proven to be a catalyst for additional housing demand.

Affordable measurements of RBC national homes (ownership costs as a percentage of household income) hit 52 percent In the first quarter of 2021. This is the worst level in 31 years.

House prices rose a record 17.8 percent in the year ending July. Terranet-National Bank Home Price Index (HPI).

“The rise over the past year has been astounding, but prices haven’t fallen in the short term,” according to a statement from the Teranet-National Bank HPI on August 19.

“Current [home sales] The activity remains historically strong, driving strong price increases in most markets, “said BMO’s senior economist. Robert Kavic With the notes of August 16th.

While the three biggest parties have proposed policies that allow more people, especially first-time homebuyers, to buy homes, CIBC’s Deputy Chief Economist Benjamintal said interest rates are already very high. It is low and warns that Canada’s heavily debt-bearing households are extremely vulnerable to rising interest rates.

“Once you have defined a demand tool, you need to be careful …. I don’t want people to borrow more,” Tal told The Epoch Times.

The NDP noted that MLS benchmark home prices soared from $ 433,800 when Trudeau was first elected in November 2015 to $ 734,500. That’s a 69% increase in less than six years.

The number one problem has long been an inadequate supply of housing, Tal said.

“The solution is simply more land, more buildings, more flexible zoning policies, and faster land release by the municipality. That’s what we have to do,” he said. rice field.

Political platform

Canadian real estate faces challenges that go beyond macroeconomics and public policy. Due to the issue of foreign buyers and vacant homes in Toronto and Vancouver, the governments of Ontario and British Columbia have begun to introduce taxes as a deterrent.

Political parties have proposed tightening foreign homebuyers, but said the measure was “just optics.” Better housing In the commentary last December liberalAn autumn economic statement announcing that it will work towards national tax-based measures “for the unproductive use of domestic homes owned by non-residents and non-Canadas.”

“Taxes are the only tool and have little impact when combined with policies designed to drive home prices soaring,” said the housing news agency.

The Liberal Party announced its National Housing Strategy in 2017, providing $ 70 billion over a decade to improve the affordability and availability of high-quality homes. They released the campaign platform on August 24 and promised to “build, preserve and repair 1.4 million homes in four years” to increase supply.

On August 25, liberals announced that they would raise taxes on Canada’s largest and most profitable banks and insurance companies to fund programs that help more Canadians buy homes.

Like the Conservatives, the Liberal Party will ban new foreign ownership for two years. NDP sets a 20% foreign buyer tax.

However, Tal said: “The story of the Canadian housing market isn’t about foreign investors. It’s easy … it’s a step in the right direction, but it’s not a game changer.”

The Conservative Party plans to build one million homes over the next three years to make homes more affordable, including encouraging new markets for 7- and 10-year mortgages. They also plan to release at least 15% of the more than 37,000 federal buildings used as homes, or 5,550.

The NDP says it will build at least 500,000 affordable homes over the next decade. In addition, to reduce monthly payments for first-time homebuyers, we will reintroduce a 30-year term of insured mortgages for entry-level homes purchased by the Canadian Mortgage Housing Corporation.

NS Greens Petitions have begun to urge Congress to declare affordable housing and homeless emergencies nationwide. Their proposal revolves around protecting lessors, establishing a moratorium on eviction of peasants during a pandemic, implementing housing delinquency assistance, and forcing the government to invest more in social and co-operative housing and indigenous peoples. doing.

The National Party of Canada (PPC) cuts immigration to curb demand in vibrant markets and sets the Bank of Canada’s inflation target 2% to 0% It will cool the inflation of home prices and stop funding social housing by the federal government, saying that housing is a state or local responsibility.

Therefore, the PPC said, “Ottawa’s long-standing involvement has only distorted the housing market,” and hopes the federal government will vacate the housing sector.

Cox has a similar view, saying that “housing policy is not a federal issue.”