BUSINESS
10/26/2019 12:50 EDT

NDP About To Have Major Influence On Canadian Housing Market

Justin Trudeau's government will likely have to work on housing policy with the NDP, who have more ambitious plans than the Liberals.

DON MACKINNON via Getty Images
NDP leader Jagmeet Singh addresses his supporters at the Vogue Theatre in Vancouver, Oct. 19, 2019.

The party lost seats under Jagmeet Singh’s leadership following this week’s election, but with the Liberals only managing to eke out a minority government, NDP policy priorities may have a big impact on the legislative agenda that plays out in Ottawa over the next few years.

If Canadian political history and recent speculation are any indication, the NDP is likely to be the party that supports the Liberals, throwing their diminished seat count behind the Trudeau-led government to exceed the 170 seat House of Commons majority government target.

But while the two parties’ policy agendas overlap on many issues, it’s housing we all care about most, right?

Watch: Why rents are skyrocketing in Canada, and what can be done about it. Story continues below.

 

Following the Liberals’ victory on Monday, BMO economists Douglas Porter and Robert Kavcic prepared a very helpful breakdown of the Liberal and NDP platforms on housing and suggested that a coalition government could take on a much more active role in the housing market “in a bid to improve affordability.”

Through the last few months, all the national parties found themselves vying to win over Canadians across the country who pushed for housing to be a top issue during this election cycle.

The Liberals zeroed in on promises to expand policies they had already enacted (the First-Time Home Buyer Incentive) and took inspiration from programs that have been introduced in some form in a number of provinces hit hardest by housing affordability challenges (taxing foreign-owned vacant properties).

As I’m sure will come as no surprise, the NDP went bolder and further to the left. The party’s housing platform included promises to create 500,000 affordable housing units over 10 years (50,000 per year), implement a national 15-per-cent tax on home purchases by non-citizens and non-permanent residents, and provide a subsidy for renters who spend more than 30 per cent of their household income on housing.

In their special report published earlier this week, BMO’s Porter and Kavcic agreed that the Liberals and NDP have “enough overlap here to roll out further meaningful measures on the housing front.”

For instance, they will probably see eye-to-eye (or close, at least) on addressing non-resident ownership in the Canadian housing market, a campaign issue for both parties. If they get anywhere on it, policy action will likely involve taxing non-resident buyers in an effort to reduce speculation.

However, the economists were concerned that many of these policies risk overshooting on the housing-demand side of the equation without paying adequate attention to boosting housing supply — a favourite topic of the real estate industry which believes the market is critically undersupplied, especially in major Ontario markets.

“The NDP proposal to “create” a half million affordable units over a decade (50,000 per year) would boost annual housing starts by about one quarter, so it’s a material pledge,” Porter and Kavcic wrote.

“But, the question is: how can that be accomplished, and would it involve subsidizing builders or buyers? If the latter, the boost to demand could neutralize the restraining effect on prices of new supply.”

This column originally appeared at Livabl.