Economist David Doyle said housing affordability is one of the files he’ll be watching the federal Liberal party most closely on, but admits he’s not sure what Prime Minister Justin Trudeau’s new government will do about it.
“That was a key campaign issue, and in all likelihood the government will act on some of those items,” said Doyle, North American head of economics and strategy at Macquarie Group, in an interview. “From where I sit this just introduces another potential headwind for the economy.”
“The economy has been uber-reliant on housing, not just for the past 18 months, but the past 10-20 years,” he said.
“Housing has driven the majority of GDP growth over the last 4-5 years. Measures introduced to curb some of the excesses in there could lead to a prolonged period where housing is subtracting economic growth and creating a headwind not just for the next 12 months but beyond that.”
Trudeau, who retained his parliamentary minority in Canada’s 44th general election, and his rival party leaders were grilled on housing affordability numerous times on the campaign trail, as many Canadian housing markets have seen massive selling price increases since the onset of the pandemic.
Some of the Liberal party’s campaign promises included the tax-free First Home Savings Account, doubling the First-Time Home Buyers tax credit, and a proposed ban on new foreign ownership for the next two years.
“To me the big issue for the economy is what do the packages when it comes to housing look like,” said Doyle.
“What concretely is going to happen? What are they going to do to address housing affordability? If they do curb affordability that could introduce headwinds for the economic growth rate.”
Another key issue the business community is waiting for answers on is wage support, said Doyle, given a number of sectors are currently dealing with a labour shortage.
The Canada Recovery Benefit, which offers Canadians whose employment is impacted by COVID-19 up to $1,000 for a two-week period, is currently slated to wind down Oct. 23.
Doyle said business leaders need to know if the program will be extended as it has been numerous times throughout the pandemic.