Chris Burke and his fiancée have spent the past three years trying to save for their first home, but they keep encountering obstacles. The first challenge was saving for a down payment, and now rising interest rates have pushed their homeownership dreams even further away. This setback has not only stalled their plans to get married and start a family but has also left them feeling stuck and pessimistic about their prospects of buying a home.
Burke, a 31-year-old Ottawa resident, is not alone in his frustration. Many young Canadians are feeling increasingly disillusioned with the state of the housing market and are becoming disenchanted with the federal Liberals as a result. This growing discontent presents a political threat to the incumbent government, particularly if they fail to take decisive action soon.
Tyler Meredith, a former head of economic strategy and planning for Finance Minister Chrystia Freeland, emphasizes that the housing crisis has become the most pressing economic and political problem in the country. Given the government’s focus on immigration and its impact on the housing market, there is a clear need for more action to address the issue.
Conservative Leader Pierre Poilievre has been quick to criticize the Liberals for the current state of the housing market. He highlights the significant increases in home prices, rents, and interest rates since the Liberals came to power. According to the Canadian Real Estate Association, the national average price of a home sold in June 2023 was $709,000, compared to $455,000 in October 2015.
Furthermore, the cost of obtaining a mortgage has skyrocketed due to aggressive interest rate hikes by the Bank of Canada in response to rising inflation caused by the COVID-19 pandemic. Rent prices have also seen double-digit increases in some cities over the past year.
Prime Minister Justin Trudeau has attempted to deflect criticism of the housing crisis, arguing that it is not a primary federal responsibility. However, this statement has drawn backlash from Poilievre and others, who remind Trudeau of his previous promises to address housing affordability.
While experts agree that the federal government is not solely responsible for the housing problem, many believe that more can be done to alleviate the shortage of housing and improve affordability. The Canada Mortgage Housing Corp. has warned that 5.8 million homes need to be built by 2030 to restore affordability, but at the current pace, only 2.3 million homes will be added to the housing stock.
Experts suggest that the federal government should better align its immigration policy with housing, reform tax laws to incentivize rental developments, and push local governments to expedite housing construction. Stakeholders and housing experts have been providing input to the government on these potential solutions, and it is expected that there will be a focus on housing in the upcoming fall economic statement and next year’s budget.
The recent cabinet shuffle by Trudeau may indicate a greater emphasis on housing. Sean Fraser, an effective communicator and rising star within the Liberal party, has been appointed to oversee housing and infrastructure. Fraser acknowledges the challenge ahead but is determined to help restore a housing market where having a job is enough to buy a home.
Addressing the housing crisis involves overcoming jurisdictional issues, as many of the levers that could spur housing development are at the provincial and municipal levels of government. While some argue that the federal government should stick to its jurisdiction, others believe that it cannot turn its back on Canadians in the midst of a crisis. The federal government will need to step up and take responsibility for addressing the housing and climate change crises that the country is facing.
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