This is the fourth article in Daily Hive’s Canada Line series, a multi-platform series uncovering the systematic causes of the social, political, and economic issues impacting Canadians. Filmed on subways and LRTs across the country, the series aims to bring nuance and analysis to the very same platforms where millennials and Gen Z are most active.
Real estate is one of the largest sectors of the Canadian economy, accounting for around 13% of our GDP. Despite high interest rates, the sector remains robust, fuelled by record-breaking population growth driven by immigration.
While rents are decreasing in some parts of Canada — down 7.5% year-over-year in Vancouver to $2,724 — this isn’t enough to appease beleaguered Canadians who have no choice but to split pills and skip meals to get by.
As middle-class Canadians — and those “working hard to join them” (in one’s best Trudeau voice) — continue to live through an affordability and housing crisis, some frustrated Canucks have pointed the blame at immigration and immigrants on social media.
While their frustration is understandable, their prognosis is incomplete. According to Arny Wise, a retired developer, urban planner, and housing columnist, decades of record-low interest rates and a lack of government responsiveness are more deserving of blame.
Arny Wise spoke with Daily Hive in Vancouver. (Arash Randjbar/Daily Hive)
“We’ve been spoiled over the last 10 years. When you can borrow money for 1 or 2%, it’s basically free money, so anybody could borrow and invest it in housing,” said Wise. “That’s what caused the inflationary housing crisis.”
During the COVID-19 pandemic, interest rates hit all-time lows, triggering a pan-Canada real estate frenzy and rampant speculation. The government failed to implement safeguards to dissuade this speculation and the commodification of housing.
According to Wise, the government failed to understand the implications of the low-interest rate environment, which “encouraged every investor who had money at all to put their money in real estate,” thereby using Canadian homes “as a commodity to make a quick buck.”
The government could have legislated a federal speculation tax, imposed taxes on multiple property owners, or worked with provinces to introduce speculative taxes at the provincial level during the pandemic. Instead, it did nothing, and in some parts of Canada, the cost of housing doubled between 2020 and 2022.
Wandering views/Shutterstock
Wise believes the narrative around housing — a financial means to an end — needs to change.
He argues that multiple levels of government should prioritize housing for end users over investors. He points to jurisdictions like Singapore, which imposes a tax surcharge on numerous property owners, and other countries with more stringent foreign ownership regulations than Canada’s temporary foreign buyer ban.
“I don’t think [our foreign buyer ban] has enough teeth. There are satellite owners who live here, buy housing, and pay no income tax because their income is not in Canada.”
While Wise acknowledges the “overwhelming” demand induced by immigration, he also recognizes the need for immigration to offset Canada’s declining fertility rates.
For him, the existential question politicians and governments need to ask is how to address housing demand realistically instead of setting “unrealistic” housing targets, like the Liberals’ plan to build 3.9 million homes by 2031.
“The [Liberals’ housing targets] are impossible. It’s impossible because of labour shortages, construction costs, and financing costs. There’s nothing wrong with setting a target, but if you want it to be realistic, other policies are necessary.”
Who do you think is responsible for Canada’s housing crisis? Leave your thoughts in the comments or email us at [email protected].