Is housing affordability set to deteriorate even further?
Addressing Canada’s long-simmering housing affordability crisis requires an intensive “all-hands-on-deck” response, according to Canada Mortgage and Housing Corporation.
The Crown corporation said that the issue is not an insurmountable one, but more input from other quarters aside from CMHC will definitely be needed.
“There’s not one solution,” CMHC president and CEO Romy Bowers told BNN Bloomberg. “There’s not one institution or level of government or organization that can address the issue. It really requires all of Canada, an all hands on deck type of response.”
The statement echoed a recent report by Avery Shenfeld and Andrew Grantham of the Canadian Imperial Bank of Commerce, who said that governments at all levels should step in when it comes to moderating inflation – in turn helping manage home price growth.
“If the job of engineering that slowdown is left only to the Bank of Canada, monetary policy will have to squeeze on growth for a longer period than we previously thought, given that the labour market hasn’t opened up much slack thus far,” Shenfeld and Grantham said. “It’s not too late to consider a fiscal policy shift.”
Bob Dugan, chief economist at CMHC, stressed the urgency of mounting a united affordability response, especially considering the deterioration of supply in the most in-demand urban markets.
“I’m actually worried that affordability is going to deteriorate rather than improve unless we can do something about it,” Dugan told BNN Bloomberg.
New construction has yet to catch up to red-hot demand, with the annual pace of Canadian housing starts recently slowing by 23% on a monthly basis from 261,357 units in April to 202,494 units in May.
Dugan is anticipating only 210,000 to 220,000 new homes to be constructed this year.
“I hope my forecast is wrong, but the way things are looking right now, I’m not optimistic that we’re on track to doubling the pace of housing starts,” Dugan said.
