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A recent study by the Canadian Centre for Policy Alternatives (CCPA) reveals that Canada is building fewer homes now than during the pandemic shutdown in April 2020, despite the country's urgent housing needs. The report attributes this decline to the Bank of Canada's multi-year campaign of raising interest rates to combat inflation, which has had a devastating effect on the housing market. New single-family homes have seen a decline of 21%, new row homes are down by 8%, and new apartment construction has dropped by 2%. The most severe impacts of these rate increases on the housing sector may not be fully realized for up to two years.
The report highlights that higher interest rates disproportionately affect sectors related to housing, such as construction, renovations, and homeownership transfers, due to the need for substantial loans in these activities. Businesses in the housing construction industry, which often take on large debts for their projects, are particularly affected. The CCPA report suggests a shift in government focus, advocating for more direct government involvement in the housing market, including initiatives like directly building non-market housing, offering zero percent mortgages to non-profit providers, and converting for-profit apartments into non-market buildings with lower rent. It also calls for the enforcement of rent controls, the implementation of transfer taxes on investment properties, and the imposition of mortgage restrictions for investors.
The report concludes by urging governments at all levels to take direct and ambitious action in the housing sector, moving away from over-reliance on the private sector and implementing measures that address the current housing crisis more effectively.
Read the full article on: REAL ESTATE MAGAZINE
