Cooling down an overheated market
Housing has become out of reach for many Canadians, in particular for young families living in big cities. Vancouver and Toronto have become two of the most unaffordable large cities in the world.
Over the past decades, the federal government has spent billions of dollars and created various bureaucratic programs to presumably make housing more affordable, with no results. Among other things, it has manipulated the financial criteria to qualify for mortgages and mortgage insurance, provided tax breaks to first buyers, and funded social housing.
The fundamental problem however is the mismatch between supply of and demand for housing, that Ottawa, the provinces and municipalities are making worse with other policies, in particular mass immigration and zoning restrictions.
About 40% of immigrants to Canada end up settling in only two cities, Toronto and Vancouver, where the housing shortage is most acute. The Trudeau government has increased immigration targets from 250,000 per year under the Harper government, to 350,000, and is now planning to increase it to over 400,000. Mass immigration is one of the main reasons for the constantly high level of demand for housing and the exorbitant prices in these cities. Even if a lot more houses were to be built, supply cannot keep up with this level of demand.
Overall inflation has become a major problem in every sector of the economy and is a consequence of inflationary monetary policy – that is, the Bank of Canada printing too much money in order to fund the Trudeau government’s gigantic deficits. This inflationary policy adds to the already overheated conditions in the housing market.
Housing is primarily a provincial or local responsibility. Ottawa’s involvement over the years has only resulted in distorting the housing market. There is nothing the federal government can do to change provincial or municipal zoning laws, but it can stop contributing to the overheating of the housing market in different ways.
A People’s Party government will:
Substantially reduce immigration quotas, from about 400k planned by the Liberal government, down to 100k-150k per year. This will help reduce demand for housing and cool down these markets, especially in the large cities where most immigrants settle.
Modify the Bank of Canada’s inflation target, from 2% to 0%. This will cool down inflation in all sectors, including housing.
Stop funding social housing, which unfairly competes with private developers and has historically been a financial, social and urban planning disaster in every city where it’s become widespread. It is not the government’s role to build and rent apartments. Dependency on government handouts is never the solution.
Privatize or dismantle the Canada Mortgage and Housing Corporation (CMHC), a mammoth government agency that fuels the housing crisis instead of helping to cool it down. All it has ever done is encourage Canadians to buy houses they can’t afford, and accumulate massive amounts of debt that the federal government, and ultimately Canadian taxpayers, will be responsible for.
Work with provinces to curb speculation and money laundering by foreign non-resident buyers in Canada’s land and housing markets.