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Well that's interesting. That seems like a pretty sound argument - we want less consumer spending, except on housing where we want more, so you need to offset the impact of rate hikes in just that sector. Or maybe we could try an alternate way to cool the economy, besides interest rates? It'd be risky though.
I still wonder why we have this problem in the first place. It sounds like our construction industry is unproductive for it's size but I can't fathom why.
The thing everyone keeps forgetting somehow is that the goal of capitalism is to make profit, not improve quality of life.
The role of government is to regulate capitalism so that the profit goal and the quality of life goals end up being the same thing.
Unfortunately government isn't doing that right now because the number of people benefiting financially from this market distortion is larger than the number of people being negatively impacted. 65% of residential properties are still owned by the family living in them. That number will go down over time, and the government will bring in more regulation to re-align things, but we simply aren't there yet.
It's baffling how long construction takes here.
A right of way for TransCanada pipeline going between houses near where I live has been fenced off and being worked on for almost 2 years now. It's like 200m long.
The highway expansion and overpass replacement nearby has been about 1.5 years now and probably still another 6-12 months away from completion.
Highway repairs from flooding have been ongoing for 2 years now coming up next month.
That's what the data points to as well. We have an appropriate amount of construction workers (edit: or at least in a similar shortage to elsewhere), and the costs of things isn't all that different from the US either. And yet, the output is tiny.
What I really need is to hear from someone who's actually worked in construction on both sides of the border.
Inflation is a monetary issue. You need to vacuum the excess liquidity in the economic system by having high interest rates. There is no escape to that.
Maybe if we'd removed the limitations on the building height or other law that limits the housing offers, the private sector would build more houses, who knows.
Yes, we should absolutely do that too. Calgary is going to vote on blanket rezoning all single-family housing area to allow 4-plexes (with additional basement suites), for example.
I guess the "simple" solution, looking at this data, would be to give a special BoC interest rate specifically for financing certain housing loans and mortgages, and continue raising the rate for everything else. There might be pitfalls to that that I'm not considering, though. You'd want to be sure there's no way for other instruments to inappropriately get cheaper as a result.
Tax speculators. It'll free up tons of housing.
I'm skeptical. Buying an expensive asset and collecting nothing from it is usually a good way to lose money. Didn't Vancouver already do this a couple years ago anyway?