In a report by BNN's John Gray, Gluskin Sheff + Associates chief economist and strategist David Rosenberg argued that the strategies currently proposed by various quarters—which include “tinkering” via CMHC guidelines or continuously adjusting down payment requirements—are woefully inadequate as they are neglecting an important segment.
“We continue to focus on the wrong area,” Rosenberg said in his interview with BNN. “The focus [needs to be on the] supply constraints that politicians at every level of government can ease up.”
“Where is the emphasis on zoning regulations, on making incentives to increase building approvals, on making it easier for the builders to respond to this strong demand?” the analyst added.
Furthermore, federal intervention such as added taxes on foreign nationals would not work in cooling down Canada’s real estate markets as these buyers are “inherently non-price sensitive”, Rosenberg said.
“What’s the federal government going to do that it hasn’t done? [And] the Bank of Canada isn’t going to raise interest rates in this environment,” the economist said.
A more pressing problem is looming just beyond the horizon, however, as the affordability crisis is quickly shaping up to be not just a financial consideration, but also a social risk considering that millennials are among the buying populations most affected by the seemingly non-stop price growth.
“What you are doing is pricing an entire generation of young people out of the real estate market,” Rosenberg warned.
By solely aiming to resolve demand-side issues, Canadian authorities are missing the big picture when it comes to addressing the country’s overheated housing markets, according to a prominent economist.