Trudeau says home prices must remain high. It's not the right advice. In my point of view, before he became the Prime Minister of Canada, the price of a house was somewhat affordable. Anyone could buy a 4-bedroom detached house in the GTA for under $600k. Now, the price of a similar house is over $1.5 million. In ten years, it increased by around a million dollars. This is unaffordable. If he wants to make housing affordable again, the price of a similar house should be at least under $800k. Instead, he wants to keep home prices in an unaffordable range.
Why has this happened?
Uncontrolled immigration (legal immigrants and international students)
Keeping the record low interest rate for too long
Home buyers' greed
Not building enough rental units (including affordable ones)
New technologies like Airbnb
Now, the young generation can't start their lives as their predecessors did. Their income is not enough to buy a house at the current high prices. Low-income workers will never be able to buy any house at these prices unless their income increases to over $140k.
- 4-bedroom detached house in the GTA for under $600k -
What the Prime Minister should do is:
Control immigration (including international students)
Build more and more affordable units
Never reduce the interest rate as happened in the past; always keep it at least at 3% and above
Implement projects to increase production
If you don't do any of these and want to keep home prices high, then there's only one way to solve the affordability issue: increase the minimum annual income to $140k, which is not possible and is unaffordable for the government.
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