Housing ministers meet as MPs ready for more hearings on pace of price gains
OTTAWA — Canada’s housing ministers on Thursday went over plans to ease affordability issues just ahead of more hearings in a parliamentary probe of price gains and their effect on headline inflation.
Housing Minister Ahmed Hussen hosted the virtual meeting of his provincial and territorial counterparts to talk about ways to boost the supply of new units.
They were also to talk about options to discourage buyers from accumulating a large portfolio of investment properties. Research from the Bank of Canada suggests investors account for just over one-fifth of home purchases nationally.
In a tweet, Hussen said the ministers talked about how to address housing needs of Canadians across the country, adding that “a strong partnership is crucial to ensuring no one is left behind.”
Home prices rose consistently last year in an environment of low mortgage rates and consumer demand for larger spaces that outstripped supply.
Statistics Canada reported Wednesday that homeowner replacement costs, which most closely match new home prices, were up 13.6 per cent year-over-year in December, continuing a streak of double-digit increases that began in May.
The measure was a key driver of the annual inflation rate in December, which hit a 30-year high.
The Canadian Real Estate Association reported that the national average home price hit $713,500 in December, up almost 18 per cent from the same month one year earlier.
The differing rates of price change between the association and Statistics Canada has opposition MPs wondering if the data from the statistics office accurately captures the impact of housing inflation.
Statistics Canada looks at a home as an asset and measures the cost to replace and use a house, including mortgage interest, property taxes, insurance and maintenance.
Other countries take different approaches.
The United States looks at a homeowner’s equivalent cost if they were renting their home, which is less sensitive to housing prices but would take a larger share of the basket of goods Canada uses to calculate inflation.
Australia and New Zealand look at the purchase price. Sweden’s measure looks at prices, financing costs and depreciation, which can lead to volatile impacts in a consumer price index.
Conservative finance critic Pierre Poilievre thinks one of those options or another, like a separate index for changes in asset values, rather than just consumer prices, could be used to better reflect housing inflation.
Poilievre hasn’t settled on one option, but promised the Tories will suggest one when the House of Commons finance committee wraps its study on inflation.