Which Party Has the Best Blueprint for Fixing the Housing Crisis?

In his 1977 classic “Movin’ Out (Anthony’s Song),” Billy Joel sings about a young grocer who is working too hard to save up for “a house out in Hackensack.” Today, if Anthony were Canadian, he’d likely need to be a lawyer or banker to have much hope of buying his own home. And he wouldn’t get a house so much as a duplex or a condo. In a recent poll, respondents cited the cost of living as the most important factor when deciding how to vote in the upcoming federal election, outpacing Canada’s relationship with the US. For respondents aged eighteen to forty-four, housing affordability was next on their list. These polling data challenge the popular claim that Canada-US relationship is the defining issue of this campaign. And they make clear why housing platforms are a key part of each party’s pitch to voters. The Liberal Party, under Mark Carney, has been the most ambitious in its housing promises, with a multi-pronged proposal to spur housing development and bring down home prices. Most notably, Carney said a Liberal government would “get the federal government back into the business of home building.” A new government agency, called Build Canada Homes, would be created to develop large-scale, affordable housing projects and to provide favourable financing to prefabricated and “affordable home builders,” says the party’s March 31 press release. It claims that these and other measures would result in almost 500,000 new homes a year. The Conservatives were unsparing in their criticisms.

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• I Can’t Buy a Home, So I’m Fixing Up a Decrepit Farmhouse
• There Is No Housing Crisis

“The same government that can’t get passports out to Canadians or run websites efficiently, is now telling us that the solution to our housing crisis is to put their same failed government in charge of homebuilding,” the party said in a press release a day after the Liberals’ announcement. “Ottawa should be getting out of the way so our hardworking tradespeople can build, not pretending that bureaucrats in corner offices will fix this.” They have a point. Globally, there are some examples of governments successfully developing homes at scale for citizens. But Ottawa struggled to deliver on core services, such as issuing passports and tax collection, even as the size of the civil service grew by 42 percent and total spending on outsourcing reached a record high of $17.8 billion last year under Trudeau’s leadership. Similarly, the Liberals’ claim that these measures would kickstart 500,000 homes a year is disconnected from recent precedent. In 2024, just over 245,000 homes were started, a 2 percent increase from 2023. One encouraging aspect of the Liberals’ plan is a proposed Multiple Unit Rental Building cost allowance—a tax incentive for investors that would apply to newly constructed rental units. The policy, which the Liberals say led to the creation of nearly 200,000 units between 1974 and 1981, is a private sector incentive that keeps the government out of the development business. Carney’s plan also proposes “cutting municipal development charges in half for multi-unit residential housing while working with provinces and territories to keep municipalities whole.” In other words, cities that reduce the fees they charge developers to build would not bear the full cost of the lost revenue; instead, the loss would be offset by federal taxpayers’ dollars. Midway through the campaign, the Conservatives matched this proposal, promising to reimburse municipalities 50 percent of the charges they cut, up to a maximum of $50,000 in savings per home. Bluntly, these proposals are a bad idea. They would subsidize municipalities such as Toronto, Markham, and Vancouver that have failed to bring their development charges down. Meanwhile, municipalities with low charges, such as Charlottetown, Prince Edward Island, or St. John’s, Newfoundland and Labrador, or those that have recently reduced their charges, such as Vaughan, Ontario, would receive next to nothing. These proposals should be scrapped. Finally, the Liberals also pledged to eliminate the Goods and Services Tax for first-time home buyers on new homes at or under $1 million—a move that would save such purchasers up to $50,000. The Conservatives have pitched a similar plan, promising to abolish the GST for all home buyers on new homes under $1.3 million, saving all home purchasers up to $65,000. Of the two, the Conservatives’ pitch is superior—and not just because it touches more voters. If the goal is to encourage the creation of new houses, removing the GST is the easiest way to reduce new home prices across the board. The Liberal policy of limiting the GST break to first-time buyers blunts the impact of the measure. And first-time home buyers do not necessarily need the support. By contrast, the New Democratic Party’s key pledge is to reduce borrowing costs for lower-income Canadians. This has the virtue of directing support to the Canadians who most need it. But its flaw is that the measure would spur demand for houses, which would only push prices higher. Canada’s housing affordability crisis will persist until home prices come down through some combination of increased housing supply and reduced housing demand. Measures that move the supply-demand curve in the wrong direction should be rejected out of hand. No matter which party wins, the housing issue must be addressed forcefully. The level of frustration among young Canadians is clear and understandable; housing affordability is at levels last seen in the 1980s. If no solution is found, the sense of disillusionment Joel crooned about in 1977 would remain just as apt today: “if that’s movin’ up, then I’m movin’ out.”The post Which Party Has the Best Blueprint for Fixing the Housing Crisis? first appeared on The Walrus.