Housing Minister Wants to Make New Homes Affordable Without Current Homes Losing Value. Is That Possible?

Housing Minister Gregor Robertson Gregor Robertson in a file photo. The Canadian Press/Darryl Dyck

News Analysis

A day after taking office, Canada’s new Housing Minister Gregor Robertson faced scrutiny for suggesting the solution to Canada’s housing crisis is not to bring prices down but to build more affordable housing.

“Do you think home prices need to go down?” a reporter asked Robertson on May 14, before the new minister headed to his first cabinet meeting.

“No,” Robertson said. “I think that we need to deliver more supply, make sure the market is stable—it’s a huge part of our economy.”

Robertson, a former mayor of Vancouver, added that the federal government hasn’t built affordable housing in decades, contributing to a “huge shortage” across Canada.

“Our commitment right now, our government, is to double construction and focus on the affordable side,” he said.

Conservative MP and housing critic Scott Aitchison reacted to Robertson’s comments, saying that the housing minister “couldn’t be more wrong” and that bringing prices down in Canada was necessary to “restore the dream of homeownership.”

“We desperately need to bring down the price of new homes in Canada,” he said, citing an April 2024 Ipsos poll in which 80 percent of Canadians said they believed owning a home in Canada is now “only for the rich.”

After his comments sparked criticism, Robertson took to social media to explain that the question he answered was about “reducing the price of a family’s current home, which for most Canadians, is their most valuable asset.”

If the question had been whether homes should be more affordable, then “of course they should,” he said.

When a reader responded to his post asking how he would make homes more affordable without lowering prices, Robertson replied, “Build affordable homes at scale.”

But improving affordability without bringing down prices may not be feasible, says Frank Clayton, a senior research fellow at Toronto Metropolitan University’s Centre for Urban Research and Land Development.

“It’s really inconsistent, because the only other way you could improve affordability without decreasing house prices is to increase incomes,” Clayton told The Epoch Times in an interview.

Evaluating Minister’s Arguments

The minister’s housing strategy can be interpreted from two perspectives, Clayton said. One is as an acknowledgment that the government cannot build enough housing to lower prices in the near term, since doing so would require directing most, if not all, government spending toward housing.

Clayton cited a Fraser Institute study estimating that Ottawa would need more than $300 billion in additional financing each year until 2030 in order to restore housing affordability. This is significantly more than the $8.5 billion in new funding that the government set aside in last year’s budget to build 3.87 million new homes by 2031–32.

The Fraser Institute study was based on a September 2023 estimate by the Canada Mortgage and Housing Corporation projecting that Canada would need to build about 3.5 million additional housing units by 2030 in order to restore affordability.

“[The] government will never be able to increase the supply of housing enough to really bring prices down,” Clayton said. “All they can do is basically slow down the increase in prices, because with inflation, prices are going to rise.”

Another way the minister’s housing strategy could make sense, Clayton said, is if he’s focused on the affordability of government-provided housing. But that approach would also come with a significant cost, Clayton added, since improving affordability in this sector, particularly rental projects, depends heavily on government subsidies.

Mike Moffatt, an economist and assistant professor at the Richard Ivey School of Business at Western University, said the minister’s stated desire is “akin to saying that you want to change the temperature of the water but only on one side of the bathtub.”

“Housing is a system. A large supply increase in affordable housing will lower demand in the rest of the system, lowering prices,” Moffatt said on the X platform.

A reader challenged him by asking whether the effect would still hold if the only new housing developed to address affordability are government-subsidized or rental-only units, and if the homes meant for purchase are not part of such government programs. Moffatt said that would still pull housing prices down, “particularly at the lower end of the market.”

Robertson’s Response

Robertson has stood by his comments. In a CBC interview last week, he acknowledged that it’s a challenge to make affordable housing possible while ensuring people don’t lose value on their property. But he said that can be done with the government building homes and making them available at below-market prices, while bringing in other incentives to allow young people access to the housing market.

“We’ve got to make sure that people’s assets are obviously protected ... But a big focus now [is] on affordable housing and making sure there’s entries into that, and the supply is keeping up with the demand,” he said.

“We have to make sure that we are building below-market housing at a scale that makes sure we don’t have people sleeping in the streets, that our young people can access the housing market.”

When asked over the weekend whether he wants home prices to go down, Prime Minister Mark Carney did not give a definitive answer, saying it wasn’t a “yes or no question” because “it’s a question which relates to different time horizons and it relates to different houses.”

“I want house prices to be more affordable for Canadians,” he said at an unrelated May 18 press conference in Rome, noting that his government plans to introduce measures he says will lower costs for homebuyers, such as cutting the GST on new homes, reducing development charges, and improving efficiency in Canada’s homebuilding industry.

However, “that amount of activity is not enough, necessarily, to affect the overall level of house prices,” he said.

“Once we increase as a country the rate of homebuilding, then that is going to make home prices much lower than they otherwise would be, but that’s a medium-term effect.”

Clayton says it’s clear that the overall housing supply needs to increase, and that while it’s yet to be seen how Ottawa will go about addressing the housing crisis, the government should continue its efforts to work with the provinces and municipalities to expedite housing projects.

“The best we can hope for is that [the] government will produce more housing, which will moderate increases in prices,” he said.

During the election, Carney said his government would build affordable housing at scale, including on public lands; provide over $25 billion in financing to prefabricated home builders to build more affordable homes; and provide $10 billion in low-cost financing and capital to affordable home builders.

In addition, Carney said he would remove the GST for first-time homebuyers on homes priced at or under $1 million, and also reduce red tape to facilitate more construction.