David Lu is a Canadian political staffer and political campaigner now based in London. He previously worked for the Progressive Conservative government in Ontario.
The youth vote that propelled Justin Trudeau’s Liberals to victory in 2015 seemed to have changed teams. Polling shows that for voters under 35, cost of living and housing affordability is their top issue in mind – and the dream of home ownership, or rather the lack thereof, has been fuelling a huge shift towards Pierre Poilievre’s Conservatives.
Before 2005, home ownership wasn’t a sign of extreme wealth. It was assumed by most Canadians as a natural part of the Canadian dream: if you had honest work, and an average household income, you could own a home.
From 1970s to early 2000s, the price of a home has increased in level with the rise of disposable income. Since 2005, while disposable income has increased in line with historical trends, the price of homes have skyrocketed: the average price for a home in Canada nearly doubled since 2005, mainly in Ontario and British Columbia.
Low interest and mortgage rates played a part in making home ownership an attractive investments. New homeowners and investors alike have consistently bid way above the asking price for resale proprieties.
High immigration rates – averaging a quarter-million a year since 2000, and reaching almost half a million new residents in each of the last two years – have also played their part. While Canada desperately needs immigrants to keep up with productivity, the supply of homes to house the newcomers has not kept up with the demand.
The antiquated and bureaucratic processes of building new housing, along with increasing construction costs, has made it even more difficult for developers to list new homes at an affordable price; between 2020 and 2023 the most populated city in Canada, Toronto, saw the second-highest increase in construction-related costs in the entire world, falling only behind Prague.
All levels of government have tried to tackle the housing bubble. But although the recent high interest rates have cooled off the housing market, there is still a fundamental supply and demand imbalance driving costs higher than the average Canadian is able to afford. This especially affects those under 30 looking to purchase their first home.
In Toronto, a Vacant Home Tax was introduced to deter home owners from using their non-primary property for solely investment purposes. The aim was to stabilize the rental market by making more units available for lease.
At the Provincial level, the biggest movement on this file has come from the Ontario Progressive Conservative Party, in 2022, they made a promise to build 1.5 million homes within ten years. Enhanced government powers such as the Ministerial Zoning Orders (MZO) allowed municipal governments to request the fast tracking of new developments, bypassing the usual process that took years to approve.
The province have also been making cash payments to cities who have hit their annual housing targets. As well as reducing the development charges for new purpose built rental units.
Federally, the Liberals has also attempted to discourage the rapid price increases in the housing market. Notably, in 2023, a temporary two-year ban on purchasing residential properties was put in place for non-Canadians. In February 2024, this ban was extended for another 2 years, until 2027.
Most recently, a plan was announced to lease underused Federal land to developers to build 3.9 million homes by 2030. This has been seen as Trudeau’s latest and maybe last attempt to appeal to young voters looking to stop renting.
However, after the announcement the national housing agency, Canada Mortgage and Housing Corp, stated that this number is still 1.2 million units short of what is actually needed; the other policy changes doesn’t seem to have made a significant difference.
So is it too little too late for the Trudeau Liberals? Do the Tories have a better plan?
In 2023, the Conservatives brought forward a bill which will set more hard-line requirements for big (and unaffordable) cities to increase supply. Federal funding could potentially be withheld if targets are not met each year, and transportation funding cut if density is not built around transit hubs.
Poilievre also plans to reward cities which reduce local bureaucratic red tape that are hampering growth; along with funding incentives for meeting building targets and removing the tax on building rental homes with rent below market prices, this is pretty similar to the playbook from Ontario.
A new and calculated risk Poilievre is taking on is the fight against NIMBYism. This takes on a slightly different direction from the usual conservative view to main suburban characteristics in most Canadian cities. Canadians’ desire for more housing has clearly hit critical mass for this policy to be worth preaching.
Trudeau’s Bill is currently in second reading, but is unlikely to be passed in the Liberal-NDP coalition government. As with the Carbon Tax, it seems like he is losing the communications battle on the housing policy as well. Anything he does now will seem too little and too late. As it takes time to build, there is no chance Canadians will see relief in the housing market before the next election.
As interest rates steady, and potentially fall, I suspect that more resales will be made soon. Which means prices of homes will once again be on the rise.
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Author: David Lu
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