NW Week

Canada is not in the grip of a housing bubble

Housing bubble with Canadians

Key Takeaways:

  • Among other policy suggestions, the plan includes a first-time home buyer incentive and a tax-free first-home savings account.
  • On the supply side, the government can only do so much.

According to the former CEO of the Canada Mortgage and Housing Corporation the many factors contributing to Canada’s increasingly hot housing market, while significant, are not resulting in a housing bubble.

Evan Siddall, who led the body from January 2014 to April 2021, said on Question Period on Sunday, “I don’t think we’re in a bubble, I don’t think we are in a bubble.”

“If demand rises but supply does not, prices will rise; this is not a bubble.” So it’s a question of what the future holds and whether supply and demand will rebalance, and that’s a crystal ball question.”

His remarks come amid opposition MPs criticizing the Liberal government, including Conservative finance critic Pierre Poilievre, who claims Ottawa contributes to a housing bubble.

“Not only are Canadians spending more when they buy a house, but they are also paying more in taxes for the failed programs that this minister and government put in place to inflate the housing bubble in the 1st place,” Poilievre said during the question period last week.

The national average home price in Canada in September was $686,650, up 13.9 percent from the same month previous year, according to the Canadian Real Estate Association. Five years ago, it was little under $490,000.

Housing bubble in Canada; Image from MoneyWise Canada

According to Re/housing Max’s market outlook report, which was released on Wednesday, sale prices in the US are expected to rise 9.2 percent on average in 2022.

Siddall believes it is time for Canadians to debate whether to implement a capital gains tax on primary residences, which he believes could help close the housing inequality gap.

“One of the things that are driving people apart in our country in terms of inequality is the amount of money people make off houses they own versus the amount of money people don’t make off houses they rent.” “It’s a serious issue,” he said.

“Why don’t we tax profit on houses but not on other investments?” In our tax code, there is a non-progressive and challenging situation.”

He acknowledged that it is not an idea that policymakers consider because it would result in “political suicide.” “Politicians simply aren’t allowed to have this conversation because the opposition, of any hue, will mock them for it.” As the end, we are not able to hold the necessary debate.

Source: CTV News

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