Canada's housing plan 'bumping up against' capacity restraints, interest rates: economist
BNN Bloomberg
A new report from TD Economics says the federal government’s ambitious housing plan faces supply-side capacity constraints and demand measures that are not expected to have a significant impact.
In a report Monday, TD Bank Economist Rishi Sondhi evaluated the federal government's plan to address housing affordability. Canada’s Housing Plan, released last month, includes several measures intended to impact demand, supply and productivity. By 2031 the plan sets out to build 3.87 million new homes, requiring several years of record-high homebuilding.
“Supply-side measures are perhaps the boldest, but efforts to boost the country’s housing stock are bumping up against challenges such as elevated interest rates and capacity constraints. Meanwhile, demand measures contained in the plan are unlikely to move the needle in a significant manner,” Sondhi said in the report.
On the demand side of the issue, the report said “it could be reasonably argued” that Canada’s federal government should refrain from stoking demand amid poor affordability conditions. As such, Sondhi noted the proposed measures are not expected to significantly alter resale housing forecasts.
