The head of Canada’s housing agency is warning there simply will not be enough money available for Ottawa to meet expectations for a national strategy to tackle the wide-ranging problems in the housing market.
Evan Siddall, the president and CEO of the Canada Mortgage and Housing Corp., said on Tuesday that consultations for a national housing strategy will intensify this week, but he cautioned that demands for new spending clearly exceed what will likely be in the 2017 federal budget.
The dampening of expectations from Ottawa came as British Columbia Premier Christy Clark warned of “an affordability crisis” in her province’s Lower Mainland and that her government, which has already introduced a tax on foreign home buyers, is planning further measures.
The federal Liberal government asked the CMHC to lead consultations that will help frame a strategy that includes tackling shortages of social housing in cities and on First Nations reserves, and encouraging the private sector to build more rental units. The consultations are also looking at whether mortgage rules should be changed to help first-time buyers.
“The scope is indeed massive. The scope’s ambitious, and expectations are very high, and I must say that’s a concern. But it’s our job to try and resolve those expectations and those ideas into something coherent for the government,” Mr. Siddall said on Tuesday in a conference call with reporters. “I’m sure if you summed just the budgetary implications of what everybody expects from a national housing strategy, we would have an irresponsible budget request.”
Interest groups from across the country are scheduled to meet with CMHC officials in Ottawa later this week. Public consultations began online earlier this year. The CMHC will release a summary report in November, but its policy advice to the government will be made privately before the 2017 budget.
The government has not yet detailed how it will spend the $2.3-billion announced in the 2016 budget for affordable housing.
Social housing was a major component of the Liberal Party’s pledge in the 2015 election campaign to spend billions more on infrastructure over the coming decade. Promises included making more federal land available for social housing in urban areas, and tax breaks and other incentives for developing rental housing. But the broader housing market has become a pressing concern for Ottawa as policy makers debate the economic risks of sharp price increases in some regions.
Debate about affordability extends beyond social housing in the Vancouver area, which has high demand and a limited supply of houses. The region is boxed in by the ocean, mountains and protected areas.
In response to public concerns about rising prices, the B.C. government introduced a new tax on July 25 for foreign buyers who purchase housing in Metro Vancouver, effective Aug. 2. Since then, housing sales in the region hit their lowest August levels in four years.
The B.C. Premier told reporters in Vancouver on Tuesday she is pleased with that response.
“It’s a little bit early to really know with one month of data. But, you know, what British Columbians said to me was, ‘This housing bubble is way too hot, housing is getting far too expensive,’” Ms. Clark said. “People’s sons and daughters can’t get into the market, and if somebody already owns a home, they don’t feel like they can get a new one. There’s a real affordability crisis, particularly in the Lower Mainland. That’s why we made the changes that we did. So when we see the new numbers and they tell us we’ve slowed down the price increases for housing, I say, ‘Good.’ Because that’s what we were trying to do. We’re going to have a lot more to do.”
The Real Estate Board of Greater Vancouver said Friday that the total number of listings for existing properties in the region fell to 8,506 in August, down 21.9 per cent from the same month in 2015.
Vancouver Mayor Gregor Robertson has urged the federal government to find ways to help cool the housing market. The effects of expensive real estate are being felt especially by seniors and young families, Mr. Robertson said.
Kishone Roy, CEO of the BC Non-Profit Housing Association, said it is understandable that one federal budget will not solve all housing issues. He said that is why housing advocates want a pledge of permanent yearly amounts for housing that will allow long-term planning.
“Unlike most areas of public policy, there has essentially been 20 or 25 years of no action at all, and that’s kind of created a backlog,” he said, adding that this has led to growing waits for social housing and a rise in homelessness. “You have a whole continuum of issues that built up over basically a generation and I don’t know that anybody expects any one government to fix it all right away. But this is an opportunity to actually start doing something in a substantive way.”
The national housing strategy is ultimately the responsibility of Jean-Yves Duclos, who, as Minister of Families, Children and Social Development, oversees the CMHC. Finance Minister Bill Morneau launched a working group in June to make recommendations for policy action under Finance Canada’s jurisdiction.
About 40 per cent of renters spend more than 30 per cent of their pretax household income on rent, according to the Canadian Rental Housing Index, which is produced by a collection of housing agencies. The agencies say 30 per cent is unaffordable. The data also show 19 per cent of households spend more than 50 per cent of their income on rent, which could force them to forego other essentials.
The data underscore repeated warnings about the Vancouver and Toronto housing markets.
The average rent in the Greater Vancouver region is $1,108 for a two-bedroom residence, and 45 per cent of households spend more than 30 per cent of income on rent. Nearly one quarter spend more than 50 per cent.
In Toronto, the average two-bedroom rental costs $1,124 a month, and 43 per cent of households spend more than 30 per cent of their income on rent. Overcrowding is another concern, with nearly 100,000 renter households in Toronto living in a place that is too small for the number of tenants.
The index data are based on the 2011 census, meaning rental costs have likely increased since.
With reports from Andrea Woo and Brent Jang in VancouverReport Typo/Error