Ottawa’s subsidies program marketed to the public today as a means for young people to buy houses at today’s ridiculously inflated prices is in fact a set of pass-through subsidies to holders wishing to sell properties at the rarefied height of today’s house market.
This is the case because not only will these subsidies not reduce house prices, but by pumping cash into buyers’ hands, they will support the unsustainably high house prices that have resulted from financializing housing in Canada.
When so few people can afford to buy a house, a better plan is, first, to exclude every category of investor — from hedge funds to REITs to small independent rental market predators — from the housing market to prevent any more houses being rented at exorbitant rates.
Prices will therefore come down. Why? Because the supply of potential buyers sufficiently flush to pay the going rate for a house not meeting the demand of sellers looking to make a killing on the properties they hold will force those sellers to take a haircut.
Ottawa needs to understand that its function when it comes to housing is not to maximize the economic rents property holders get to extract from Canada’s wealth-creating sectors but to house Canadians at prices in line with the productivity of Canada’s real economy.
Bill Appledorf
Victoria
