OTTAWA – The former CEO of the Canadian Housing and Mortgage Corporation said many of the factors contributing to Canada’s increasingly hot housing market, while notably, did not accumulate in the housing bubble.
In an interview on CTV’s Question Period that airs Sunday, Evan Siddall, who led the agency from January 2014 to April 2021, said “I don’t think we’re in a bubble, I do. really don’t think we’re ‘in a bubble.”
“If demand increases but supply doesn’t increase then prices will go up, that’s not a bubble. So it’s a question of what the future brings and whether supply and demand will ever come back into balance and it’s a question of crystal balls. ”
His comments come amid criticism of the Liberal government by opposition MPs, including Conservative financial critic Pierre Poilievre, who says Ottawa is contributing to the housing bubble.
“Not only are Canadians spending more on home purchases, they are now paying more in taxes on the failed programs this minister and government launched to inflate the housing bubble,” Poilievre said. week.
The national median home price in Canada was $686,650 in September, up 13.9% the same month last year, according to the Real Estate Association of Canada. Just 5 years ago, it fell to just under $490,000.
According to Re/Max’s housing market outlook report released Wednesday, sales prices are expected to increase by an average of 9.2% nationally in 2022.
Stimulating A FACTOR?
Siddall, now CEO of the Alberta Investment Management Group, also countered claims that the Liberal Party’s pandemic stimulus response was the root of inflation.
“It’s more about demand and supply response. So again, there are market factors including slow approvals – lack of coordination among city, provincial and federal governments and difficulty for residents to build homes. That’s a problem. Another problem is that low rates make housing more attractive. Mortgage insurance makes it even more attractive,” he said.
Former finance minister and Liberal deputy chancellor John Manley agrees it depends on factors of supply and demand but said there must be an element of a reduction in government spending, which he hopes will be remedied in the upcoming Fall Economic Statement.
“It takes some planning to watch our spending when the rate of our economy starts to go down, which can’t go on indefinitely. Canadians won’t prosper, we won’t have assets to redistribute and spend on all these programs if we don’t attract investment into our country which creates wealth. ,” Manley said in a separate interview on CTV’s Question Period.
“Through all of this, I have yet to hear a truly comprehensive explanation of how we are going to build our economy for the future to create the prosperity Canadians will need.”
LIBERAL HOUSE PLANNING
A key pillar of the Liberal Party’s national housing plan aimed at supply is its proposal to invest $4 billion in the Housing Accelerator Fund, which it says will create 100,000 new homes for the middle class in the country. Canada’s largest cities by 2024-25.
The plan also includes tax-free incentives for first-time homebuyers and first-home savings accounts, among other policy ideas.
When asked if these initiatives are effective enough to cool down the market, Siddall said they are at “profitable”.
“Let’s face it, that’s all the government can really do on the supply side. That’s too much for a government to deal with. We’re talking trillions of dollars in housing activity. It is a supply problem, but not a supply problem that the government can solve on its own. It needs private sector support,” he said.
A NEEDED DEBT
Siddall said it’s time for Canadians to debate whether implementing a capital gains tax on primary residences, he says, could help close the housing inequality gap.
“One of the things that really separates people in terms of inequality in our country is how much money people make from homes that own them compared to what people don’t make from homes. theirs when renting them. That’s a real problem,” he said.
“Why don’t we tax income from home but tax income from other investments? That’s a serious situation, no progress on our tax code. “
He acknowledged that it was an idea that was not on the minds of policymakers, as it would lead to “political suicide”.
“Politicians are just not allowed to have this conversation because the opposition, and of any color, will skewer them for it. And so we don’t have the debate that we have to have.”