The Montreal Economic Institute think tank is calling on the federal government to stop measures that spark increases in real estate prices.
The MEI statement says rapidly rising prices for residential real estate in Montreal, as well as Toronto, or Vancouver, “has very tangible consequences for the middle class.
“Potential buyers in Montreal are faced with an overheated sector characterized by bidding wars. What explains this?”
Miguel Ouellette, Director of Operations and Economist at the MEI, said the supply of new properties “is not rising as quickly as the demand.
“The situation has worsened over the past year as Canadians’ savings grew significantly,” he added. “One solution would be to build more housing, which means more flexible zoning rules and an end to regulations aiming to impose the construction of social housing in residential towers. Indeed, these measures just drive up the prices of the other units, making them less affordable for the middle class.”
Olivier Rancourt, economist at the MEI, stated that the federal government “also put measures in place in 2019 to make access to housing easier for first-time buyers.
“Even though the intention was good, this just pushes prices higher and makes buying more and more difficult,” he added. “Extremely low interest rates also mean that people are ready to buy more expensive houses than before. We need to remember that interest rates have been at historic lows for more than 10 years now. In short, with municipal governments slowing the construction of new housing and a federal government stimulating prices, there’s nothing surprising about the current situation. But it could well prove untenable, or at least very difficult for the middle class.”
