Housing Minister highlights other factors that could impact the housing market
In an interview with Bloomberg, Canada’s Housing Minister Sean Fraser discussed the government’s efforts to boost homebuilding, emphasizing that the primary goal is to improve housing affordability over time, rather than to decrease home prices.
“It’s not my goal to bring down housing prices,” Fraser stated. “My goal is to build more supply at prices that people can afford.” He acknowledged that measures to increase housing supply could exert downward pressure on prices in certain markets. However, he stressed that numerous factors influence home prices, many of which fall outside government control.
Prime Minister Justin Trudeau’s administration has been navigating the challenging terrain of enhancing housing affordability while maintaining the value of homes for current owners.
Bloomberg noted the significance of this balance, particularly for families with large mortgages in high-cost cities like Toronto. Both Fraser and Trudeau have clarified that the intent is not to lower home prices, prompting questions about how affordability can be improved under the current strategy.
Addressing issues in housing affordability
Over the past decade, the benchmark price for homes in Canada has surged by 77%, and apartment prices have increased by 90%, according to the Canadian Real Estate Association (CREA).
Fraser is confident that the construction of more multi-unit buildings will not negatively impact the broader housing market. “I don’t know that an extra apartment building in downtown Toronto is going to eat away at the price of a single-family home in Oakville,” he noted, referring to a suburb of Toronto. He pointed out that while several factors drive high housing prices, the cost of land is significant. Therefore, the government is promoting higher-density projects.
Despite these initiatives, there is resistance from single-family homeowners to the development of fourplexes or low-rise condominiums in their neighbourhoods, due to concerns about potential impacts on property values. One aspect of Trudeau’s housing strategy is a C$4 billion fund aimed at incentivizing cities to loosen zoning regulations to allow more multi-unit buildings.
Since his appointment as housing minister about a year ago, Fraser has gradually unveiled parts of this strategy, culminating in a significant pre-budget announcement in April. This plan involves billions in public funding and an ambitious goal to construct 3.9 million homes by 2031. However, Bloomberg noted this announcement has not significantly improved the Liberal government’s standing in opinion polls.
“The motivation of the housing plan was not to get a short-term bump in the polls. It was to solve the housing crisis,” Fraser noted.
Questions around housing crisis
Conservative Leader Pierre Poilievre has criticized Trudeau’s government for the housing shortage, emphasizing that the issue has intensified during Trudeau’s nearly nine-year tenure. Poilievre has vowed to mandate a 15% annual increase in homebuilding in major cities, threatening financial penalties and withdrawal of federal funding if targets are not met.
Fraser expressed his readiness to present “competing visions for Canada” during the upcoming election campaign. “Rhetoric will get you a lot of likes on Facebook or Twitter but it’s not actually going to help solve a big problem,” he said.
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