(Bloomberg) — Canada’s housing minister says the government’s efforts to ramp up homebuilding may help bring prices down in some markets, even though that’s not the objective.
Sean Fraser said the government’s intention is to improve affordability over time, as workers’ wages rise and it implements its strategy to create more townhouses, fourplexes and apartments.
“It’s not my goal to bring down housing prices. My goal is to build more supply at prices that people can afford,” he said in an interview.
“Some of the measures that we put in place that will drive that supply could have downward pressure on the price of homes in different markets. But it’s important to understand that there are a lot of factors that go into that, many of which are outside of the influence of government.”
Prime Minister Justin Trudeau’s government has tried to walk a tightrope between boosting affordability, especially for younger generations, while preserving the wealth of homeowners. Politically, it also must try to protect families who took out large mortgages on homes in expensive cities, especially in the vote-rich Toronto area.
Fraser and Trudeau have both previously said they aren’t trying to sink prices — raising questions about how, exactly, homes will become more affordable. The benchmark price of a home in Canada is up 77% in the past 10 years; for apartments, it’s 90%, according to Canadian Real Estate Association data.
Fraser said he believes it’s possible to add more multi-unit buildings without dragging down the broader market. “I don’t know that an extra apartment building in downtown Toronto is going to eat away at the price of a single-family home in Oakville,” he said, referencing a suburb of Canada’s largest city.
There’s no one factor driving high housing prices in Canada, but the cost of land is a major component, Fraser added — which is why his government is now touting higher-density projects.
However, many owners of single-family homes resist fourplexes or low-rise condo buildings going up next door due to concern about home values. One plank of Trudeau’s housing strategy is a C$4 billion ($2.9 billion) fund to give incentives to cities to loosen zoning rules to allow more multi-unit buildings.
Fraser has been releasing portions of the strategy since he was appointed housing minister about a year ago, culminating in a sweeping pre-budget announcement in April involving billions of public dollars and an ambitious pledge that would see 3.9 million homes built by 2031.
The announcement has failed to turn the tides for the Liberal government in opinion polls. “The motivation of the housing plan was not to get a short-term bump in the polls. It was to solve the housing crisis,” Fraser said.
Conservative Leader Pierre Poilievre has heaped blame on Trudeau’s government for the housing shortage, noting that the problem has worsened during the prime minister’s nearly nine years in power. Poilievre has promised to require big cities to increase homebuilding by 15% annually, or face financial penalties and have federal funding withheld.
Fraser said he looks forward to putting “competing visions for Canada” on the table during an election campaign. “Rhetoric will get you a lot of likes on Facebook or Twitter but it’s not actually going to help solve a big problem.”
—With assistance from Jay Zhao-Murray and Erik Hertzberg.