Government intervention, taxes won't cool housing market – ReMax

Government intervention such as policy changes and new taxes are not the answer to cooling what Ottawa fears are overheated Canadian housing markets, according to ReMax Canada.

“Yes, Canada, we have a housing problem with the unprecedented levels of activity – from soaring price increases across virtually all markets spurred on by overwhelming demand to profound challenges in housing affordability,” the company says. “While COVID-19 has made this significantly more pronounced, the issues facing Canada’s housing market were brewing long before the pandemic struck.”

Instead, the national realty firm proposes three other measures to address the growing affordability challenges in some areas:

Increase housing supply

The most critical solution, increase housing supply by incentivizing development of affordable, family-sized housing, such as three-bedroom condos, and allow for more detached housing beyond existing urban centres. Realistically, it’s not feasible to fight urban sprawl while simultaneously expecting housing prices to cool. Now is the time to consider expanding the boundaries of developable land.

Mandatory conditions

In the resale market, add a mandatory condition to every offer, making the purchase conditional on receiving financial or legal approval on the purchase. In multiple offer situations, this would reduce buyer’s remorse and would help to ensure that people can afford what they are buying.

Provincial involvement

Provincial regulators need to be more involved. For example, review transactions where homes are sold well over asking price. This would ensure fair listing prices, and prevent homes being listed well below market value to incite bidding wars. Agents found to contravene these rules should face fines.