Canadian home buyers continue to struggle with rising market prices after Parliament’s speech from the throne last Tuesday failed to address low market supply.
“We must keep tackling the rising cost of living,” said Governor General Mary Simon during the speech to the throne. She spoke of The Housing Accelerated Fund, a first-time home-buyers incentive, and a new Rent-to-Own program. All these policies were first introduced during the Liberal election campaign last summer amid multiple affordable housing protests.
Housing prices are up 13.3 percent across Canada compared to last year. First-time buyers are among the worst affected by this increase. The Royal Bank of Canada released a poll last April showing that 36% of Canadians between 18 and 40 doubt that they will ever own a home.
“We had to save up a considerable down payment even to get into the lower end of the market,” said house-hunters Justin and Sarah Slobodian. They are three weeks into their search. Already, they have met challenges the government’s policies could help with. However, experts warn that these policies fail to address the real problem.
“The affordability issue is affecting huge segments of the population,” said retired Professor of Urban Geography at Mcmaster University, Richard Harris. “It’s absolutely not a long-term or even a medium-term solution. It may in the very short term help a few people.” Waiting for the market to cool could be the wrong move though.
“The longer they wait the more challenging it is to find a suitable property,” says Guelph-based realtor Lee Oldham. “The inflation is moving faster than the money they can save.” The cost of housing is on the rise, but wages have yet to catch up.
All parties offered solutions mostly designed to subsidize first-time buyers. However, these policies do not help to drive costs down. “All you do, effectively, is increase the demand for – their demand and their ability to pay for housing,” said Harris. This could subsequently make housing more expensive.
The options for lower-income households are even worse. The Financial Accountability Office of Ontario reports that from 2011 to 2018, households with a core housing need rose 19.1 percent. Households living below the poverty line will not be well served by policies that support owning instead of renting.
“The federal government has federal properties with large buildings not being utilized that could be retrofitted to affordable housing,” said Oldham. This solution has been pitched before. It was even implemented in Calgary last June when two charitable organizations began to repurpose a vacant office building into affordable housing.
Another option could be to tax the land beneath the houses. “It’s been land prices above all that have pushed up the price of housing,” Professor Harris said. As cities spend more on infrastructure, the cost of the land underneath the houses rises relative to government investments.
As the government gets to work on its new policies, Canadians are waiting to see if they have a future in the red-hot housing market.