08 Mar
The Housing Affordability Task Force says that the province of Ontario must develop 1.5 million homes over the next ten years in order to increase housing density and address the affordability crisis of the province.
The rate at which new homes were being constructed slowed down in the month of December 2021 after soaring in November. However, because of the extensive demand of houses, the fast pace at which they were being purchased and the construction slow down, resulted in increased housing prices.
While the pace of construction in December 2021 was slow, the construction of single-family homes and multi-family homes increased by 28 percent and 19 percent respectively. Furthermore, within urban areas, the construction of new homes decreased by 24% to 212,918. Multi-unit residences were reduced by 29 percent equality 157,687 units and there was a drop of 4 percent to 55,231 for single detached homes.
The policy makers of Canada are already preparing to alleviate the pressure of housing market. Prime Justin Trudeau allocated nearly $2.5 billion in the last federal budget and reallocated nearly $1.3 billion to speed up the process of housing construction. Furthermore, the Bank of Canada is also increasing their interest rates this year and this would assist the government in reducing the demand for housing for a short period of time.
Chief Executive Officer at Royal LePage, Phil Soper said, “When the central bank turns it eye to inflation again, I do think that will trigger a flattening in the market,”. “We’ve got a shortage of housing in this country so there’s constant upward pressure on home prices,” he said.
Moreover, one of the chairpersons at CREA highlighted that the country’s housing supply issue has gotten worse in 2022. Any decline in sales perceived in early quarter of 2022 should be considered lightly because the demand for homes has not reduced.
The ‘housing bubble’ as termed by experts has led to the development of more houses all over Canada. However, it is imperative to highlight that the construction of more houses will not solve the housing crisis. Alternatives to housing-as-commodity is one method which could provide a partial solution to this bubble. Furthermore, the concept of building more houses is linked with the ownership of private property and its historical connection with citizenship.
Financial stability is another reason for building more homes because ownership of a house relates to the accumulation of wealth. Low mortgage interest rates also assist and encourage the purchase of homes. Across the whole income spectrum, the housing crisis is affecting Canadian citizens making it difficult for them to purchase properties. Several experts have recommended that government of Canada to speed the approval process for new housing units. An important point to highlight is that out of the 35 OECD countries, Slovak Republic is the only country, ahead of Canada, that requires significant time for the approval of building projects.
One of the members of the taskforce said, “Despite the good intentions of many people involved in the approvals and home-building process, decades of dysfunction in the system and needless bureaucracy have made it too difficult for housing approvals to keep up with the needs of Ontarians,”.
