Home prices in Canada have repeatedly soared to a record high, creating a widening housing gap that has crushed the dream of young home buyers. Home affordability has become one of the driving issues in the election, appearing in main parties’ primary campaign platforms. After the Conservatives and NDP announced ambitious measures to protect home buyers’ interest, the Liberals have jumped on the bandwagon, pledging a broad housing package to make homes more affordable. The heated policy race among the political parties has highlighted the escalating affordability crisis under the Liberal’s six-year reign, putting Ottawa’s existing housing strategy under tight scrutiny.
The Liberals vowed to tackle housing challenges in its 2015 campaign and imposed a series of housing measures to cool down the overheated market over the two terms in office. Its audacious housing strategy in 2017 unveiled a 10-year program at the cost of $40 billion to ease the affordability crunch. But the Liberal government seemed long on words but short on actions. A recent PBO report has found that Ottawa has spent only half of the funding earmarked for several housing programs, failing to deliver the promise of vastly expanding Canada’s affordable housing stock. Meanwhile, its highly restrictive program, First Time Home Buyer Incentive, seemed to offer only limited assistance to qualified Canadians. As of April 2021, it had distributed only 170 million to less than 10,000 qualified applicants, merely over 10 percent of its promised 1.25 billion.
The Liberals have taken a timid move on the politically thorny issue of foreign ownership out of fear of being branded as xenophobic. Despite evidence – including from the BC appeal court showing foreign buyers’ influence on the Canadian market and demand to block the foreign ownership, the Liberals had hesitated to slap a ban on the foreign investments that have driven up the real estate price. It wasn’t until the Conservatives’ bold moves in its election platform to erect roadblocks for foreign buyers that the Liberals decided to follow suit.
The mortgage stress test is another Liberals housing strategy that has failed to achieve its goal -- to cool down a red hot market. Setting a loan qualification bar intends to manipulate buyers’ ability and tamper with the market demand while neglecting the critical solution for a highly desirable market – to increase the supply. As it happened, the programs have failed to put a dent in the scorching hot demand, and the prices continued its upward trajectory. Moreover, the additional mortgage hurdles have made it more challenging for small business owners and non-permanent employees to enter the market, leading to criticisms that the mortgage rule discriminates against a rapidly expanding gig economy workforce.
The housing affordability crisis is a national emergency, as average home prices rise a mind-boggling 32 percent since 2019. The soaring housing cost has also driven Canada’s inflation rate to a stunning 3.7 percent, nearly two decades high. Amid the raging crisis, 3 in four Canadians who want a house can’t afford one, while two-thirds facing the prospect of being forced out of the local community due to the inaccessibility of home prices.
Under the Liberals’ housing policies, the affordability gaps have widened and the crisis has gone worse. Voters’ frustrations have forced the Liberals to vow billions of dollars in additional funding and a wide range of measures to address the growing crisis in the current election. But the Liberals' lack of a proven track record has raised public skepticism over its ability to tackle the housing challenges. Canadians need a home to build and a house to live in, rather than flashy announcements and promises of a spending spree.
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