Good morning. Canadian political leaders are rolling out their competing blueprints as housing affordability shapes up to be a key battleground in a brewing federal election. More on what’s at stake below, but first:
In the news
Price check: Loblaw chief executive Per Bank says the company is willing to eliminate exclusivity clauses in store leases – a move he said in an exclusive interview would create “a more competitive landscape.”
- In a Globe opinion piece, Bank argues that “a false narrative has been propagated that grocers have taken advantage of higher inflation and make excess profits.”
Kickbacks: Bridging Finance Inc. executives David and Natasha Sharpe defrauded investors, a regulatory tribunal has ruled.
Firm on fintech: The Bank of Canada is urging digital payment companies to get on board with new rules — or else.
Accounting for confusion: The Canada Revenue Agency says it will not require bare trusts to adhere to updated tax-reporting rules for the 2024 tax year.
Happening today
- Germany and the U.S. report third-quarter gross domestic product.
- British Finance Minister Rachel Reeves introduces a tax-heavy budget.
- The Bank of Japan is expected to hold rates amid political uncertainty.
- Microsoft Corp. and Meta Platforms Inc. report after close.
Conservative Leader Pierre Poilievre peaces out of a press conference in Ottawa on Monday.PATRICK DOYLE/The Canadian Press
In focus
A brewing election is already narrowing the housing debate
Conservative Leader Pierre Poilievre unveiled a major plank of his housing plan and said he would eliminate the Liberals’ existing housing programs if his party forms government after the next election.
While the parties’ plans differ on how to make shelter more affordable, they centre on the same sliver of a much broader issue: Canada faces urgent housing challenges in skyrocketing rents, homelessness and a lack of living accommodations for university students, but both the Liberals and Conservatives are courting younger voters who dream of owning a home.
- Poilievre said this week he would eliminate the 5-per-cent goods-and-services tax on new homes priced under $1-million, which he argued would help spur more home building at a time when developers have been hit by rising construction and labour costs.
- His pitch comes just over a month after the federal government announced the most significant changes to the country’s mortgage rules in more than a decade. Prime Minister Justin Trudeau’s measures, which take effect on Dec. 15, will allow Canadians to get mortgage insurance for pricier homes, and first-time buyers to stretch out their payments longer.
From a political perspective, you can see why hopeful homeowners represent a key demographic. In fact, look at this Statistics Canada report from yesterday, showing how the pandemic boosted the value of homes – and the owners’ net worth – at a far higher rate than renters.
That’s a great talking point for the real estate industry. But it also highlights why many Canadians believe homeownership is the surest path to wealth, The Globe’s Rachelle Younglai wrote in that report.
For both the Liberals and Conservatives, then, reinforcing that idea also seems to be a big part of winning power on Parliament Hill.
In announcing the federal government’s measures in September, Finance Minister Chrystia Freeland said the rule changes were aimed at helping millennials and Gen Z: “Canada needs to be a place where the dream of home ownership is alive.”
And making homeownership more accessible is a winning issue for Poilievre, whose party has shot ahead in the polls as his attacks on Trudeau’s handling of the housing file have resonated with young voters.
Closing the door
A shame, because Canada’s housing issues stretch far beyond the narrowing scope of current political messaging, which an election might render even less nuanced. And those problems are getting no less severe.
The Canada Mortgage and Housing Corporation, a Crown agency, estimated last year that the country would need about 3.5 million additional housing units by 2030 to restore affordability.
Aled ab Iorwerth, the agency’s deputy chief economist, told me the CMHC is now re-evaluating its outlook based on Ottawa’s recent decision to pause population growth through a major reduction in permanent residents. But Canada still has an “urgent need” to increase housing supply for homeowners and renters.
Rents are going up rapidly, “and that’s even if you can find a place,” ab Iorwerth said. “So housing affordability is clearly a challenge for most Canadians.”
Ottawa has taken some pressure off housing prices with its immigration reductions, “but the overwhelming need over the long term is to increase supply.”
The development of affordable housing and rental properties often hits bottlenecks at the municipal level, where decisions tend to be made more slowly, and often under pressure from NIMBY groups, he said.
But the federal government can encourage development through programs like the Housing Accelerator Fund, which was announced by Trudeau during the 2021 election campaign. Its goal, ab Iorwerth noted, is to induce municipalities to streamline processes, and to promote housing supply.
(To pay for his plan, Poilievre plans to ditch the fund, which he calls overly bureaucratic.)
When Canada goes through an election campaign – one that might not allow much room for robust and respectful debate – some housing issues risk falling off the radar. NIMBY groups are going to do NIMBY things; postsecondary institutions might still struggle with the aftermath of housing the very influx of international students they so aggressively courted; and red tape will keep empty buildings off limits in the middle of cities crying out for more space.
That’s a lot to fix — and none of it is less worthy of attention than keeping homeownership within reach. The coming election might serve as a reminder that no policy, fund or shift in private investment can, on their own, fully address Canada’s housing crisis. It takes a village.
Or, as ab Iorwerth told me: “There is no silver bullet. There may be silver buckshots, but there’s no silver bullet.”
To read more about Canada’s dysfunctional housing market, check out this story from earlier this year by a team of Globe reporters.
And email me with your thoughts, questions, suggestions – or just to say hi: cws@globeandmail.com
Charted
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“Lost decade” is a scary term that’s being thrown around a lot these days, Tim Shufelt writes. But history has shown that in those incredibly rare instances in which decades have been lost, diversified investors have found their way just fine.
The lookout
On our radar and reading list
On the big screen: Robert Downey Jr. says he ‘intends to sue’ all future executives who use his AI replica.
On the small screen: A lawsuit alleges a Hallmark executive told a former employee not to cast ‘old people’ for movie roles.
On the biggest screen: (I think?) The Las Vegas Sphere is showing its first campaign ad. I just noticed another Sphere will soon appear in Abu Dhabi. That’s too many Spheres. One is the ideal number of Spheres.
Morning markets
Global markets trended lower as investors nervously eyed the hotly contested U.S. presidential election and prepared for a fresh slate of megacap corporate earnings. Wall Street futures were mixed and TSX futures pointed lower.
Overseas, the pan-European STOXX 600 was down 1.1 per cent in morning trading. Britain’s FTSE 100 slid 0.31 per cent, Germany’s DAX declined 0.86 per cent and France’s CAC 40 1.42 per cent.
In Asia, Japan’s Nikkei closed 0.96 per cent lower, while Hong Kong’s Hang Seng fell 1.55 per cent.
The Canadian dollar traded at 71.81 U.S. cents.