OTTAWA (Reuters) - Canada will create up to 100,000 affordable housing units as part of a national housing strategy, the government said on Wednesday, but critics said the long-awaited plan did nothing to free up more land to help stem a growing affordability crisis.
Prime Minister Justin Trudeau said C$40 billion ($31.5 billion) would be spent over 10 years under the plan, with some 300,000 low-income households given an average of C$2,500 ($1,967) a year to help them find affordable housing.
“Affordability challenges have gripped cities big and small, making it harder for families to get ahead,” Trudeau told reporters in Toronto in unveiling the new spending.
With home prices near record highs despite recent cooling in Toronto and Vancouver, housing is less affordable than at any time since 1990 and rising interest rates and looming mortgage rule changes have priced many out of the market.
The government has tightened mortgage and lending rules repeatedly in recent years amid fears of a housing bubble, but analysts are sharply divided over whether more should be done to curtail demand, particularly by speculators, or boost supply.
“They’ve probably gone too far in terms of trying to make it more and more difficult for first-time home buyers, and they should instead be focused on the supply side,” said Carleton University business professor Ian Lee.
Developers and realtors have said a shortage of land for development and inadequate infrastructure are fueling the big spike in house prices, undercutting the government’s bid to curtail demand. [L2N1C20YK]
Paul Kershaw, a professor at the University of British Columbia in Vancouver, said the government should do more to change ground use or zoning policy to boost density and supply, and use tax policy to help cities figure out how to discourage investors from leaving homes vacant.
Kershaw said both were needed to rebalance a market that had given home owners and investors soaring wealth through rising house prices, while loading others with debt as they strain to get into the market.
“Some people are benefiting by great wealth accumulation in the housing market, while crushing their kids’ dreams of home ownership or weighing them down with really heavy debt levels,” Kershaw said.
($1 = 1.2693 Canadian dollars)
Reporting by Andrea Hopkins and Leah Schnurr in Ottawa and Julie Gordon in Vancouver; Editing by Peter Cooney