This past week I listened to two podcasts in preparation for Canada's upcoming federal election. I listened to Prime Minister Mark Carney with Scott Galloway and I listened to Pierre Poilievre with Brian Lilley of the Toronto Sun. If any of you have any other recommendations for an interview that I should listen to, please share it in the comment section below.
Here's what I would say. Carney came across as more measured and less direct. But naturally very capable when it comes to understanding the economic implications of our shifting global order. He wasn't forceful when talking about oil and gas pipelines, but I understand that he fully supports them. This is critical to diversifying our trade and frankly gaining more market power.
I'm skeptical of government being able to act as any sort of big developer and/or stimulate a thriving prefab construction industry. The latter is being worked on by a lot of the private sector; what is needed are dramatically lower fees and less barriers to development. I was, however, comforted by the fact that Carney did seem to reduce government's role to an enabler for private enterprise.
Both are promising dramatic cuts to development charges, which is essential. Poilievre is promising to eliminate the federal sales tax on all new homes priced under $1.3 million, whereas Carney wants to do it for homes under $1 million and only for first-time buyers. Carney also focused a lot on increasing construction trade capacity as a way to dramatically increase overall supply.
Broadly, Poilievre was more focused on "axing the tax" and removing the barriers to developing new housing. As we have talked about many times before on this blog, upwards of 30% of the price of a new home in Canada can be attributed to government fees and taxes. This is unsustainable, as we have seen, and it needs to change if we are going to improve housing affordability.
That said, Poilievre did make a specific comment that I didn't care for. He was talking about family formation and housing affordability and he said, "how can you start a family without a backyard and driveway?" He went on to say that, "people want detached single-family houses." Now, there's some statistical truth to this claim, but it's not like it's enshrined in our DNA.
It's an anti-urban statement. There are lots of cities around the world where kids are raised, just fine, without a backyard and/or driveway. They walk to school, they play in wonderful city parks, and they generally enjoy a high quality of life in an urban environment. I'm not suggesting that this has to be for everyone, but I do believe in removing our cultural biases and letting the market ultimately decide.
This is a pivotal moment for Canada. Regardless of who is successful on April 28, the status quo cannot continue. We must become a global superpower. And when it comes to housing, I would encourage whoever wins to give me a call after the election. Prime Minister: I'll walk you through a development pro forma and explain what it will take to make housing more affordable, and get lots of it built.
Cover photo by Hermes Rivera on Unsplash
Spain is a beautiful country and lots of people want to visit and/or buy property there. But here's what Prime Minister Pedro Sánchez recently had to say about this:
Just to give an idea, in 2023 alone non-European Union residents bought around 27,000 houses and flats in Spain. And they didn't do it to live in them, they didn't do it for their families to have a place to live, they did it to speculate, to make money from them, which we – in the context of shortage that we are in – obviously cannot allow.
And by cannot allow, he means that Spain is preparing to implement a 100% tax on property purchases made by buyers of non-EU countries, such as the UK. It's not quite a foreign buyer ban, but it's certainly a punitive tax that should, in theory, dissuade the majority of buyers.
I am, however, unclear as to how this will interact with Spain's golden visa program. For over 10 years, Spain has been encouraging foreigners to buy real estate in the country (minimum value of €500,000) in exchange for permanent residency.
Will this program remain, and will these foreign buyers now be taxed at 100%? Or will permanent residency also exempt you? I don't know.
Whatever the case, it is yet another example of government trying to appear as if they're doing something meaningful about housing affordability. You might also remember that, last year, Barcelona came out with a complete ban of short-term rentals starting in November 2028.
But once again, I think it's important to remember that economics is the study of choice and that there are always tradeoffs. A decision in one place, will create second-order consequences somewhere else.
Approximately 41% of the YTD population growth in Canada this year has been in Ontario. Here's a slide from a recent presentation by Zonda Urban:
So there's an argument to be made that demand is still outpacing new housing supply in most of our major markets:
Why then are new home sales continuing to slide? A reasonable answer would be that -- by design -- this new housing isn't attainable to most:
The result seems to be a long-term structural shift toward more rental housing:
This past week I listened to two podcasts in preparation for Canada's upcoming federal election. I listened to Prime Minister Mark Carney with Scott Galloway and I listened to Pierre Poilievre with Brian Lilley of the Toronto Sun. If any of you have any other recommendations for an interview that I should listen to, please share it in the comment section below.
Here's what I would say. Carney came across as more measured and less direct. But naturally very capable when it comes to understanding the economic implications of our shifting global order. He wasn't forceful when talking about oil and gas pipelines, but I understand that he fully supports them. This is critical to diversifying our trade and frankly gaining more market power.
I'm skeptical of government being able to act as any sort of big developer and/or stimulate a thriving prefab construction industry. The latter is being worked on by a lot of the private sector; what is needed are dramatically lower fees and less barriers to development. I was, however, comforted by the fact that Carney did seem to reduce government's role to an enabler for private enterprise.
Both are promising dramatic cuts to development charges, which is essential. Poilievre is promising to eliminate the federal sales tax on all new homes priced under $1.3 million, whereas Carney wants to do it for homes under $1 million and only for first-time buyers. Carney also focused a lot on increasing construction trade capacity as a way to dramatically increase overall supply.
Broadly, Poilievre was more focused on "axing the tax" and removing the barriers to developing new housing. As we have talked about many times before on this blog, upwards of 30% of the price of a new home in Canada can be attributed to government fees and taxes. This is unsustainable, as we have seen, and it needs to change if we are going to improve housing affordability.
That said, Poilievre did make a specific comment that I didn't care for. He was talking about family formation and housing affordability and he said, "how can you start a family without a backyard and driveway?" He went on to say that, "people want detached single-family houses." Now, there's some statistical truth to this claim, but it's not like it's enshrined in our DNA.
It's an anti-urban statement. There are lots of cities around the world where kids are raised, just fine, without a backyard and/or driveway. They walk to school, they play in wonderful city parks, and they generally enjoy a high quality of life in an urban environment. I'm not suggesting that this has to be for everyone, but I do believe in removing our cultural biases and letting the market ultimately decide.
This is a pivotal moment for Canada. Regardless of who is successful on April 28, the status quo cannot continue. We must become a global superpower. And when it comes to housing, I would encourage whoever wins to give me a call after the election. Prime Minister: I'll walk you through a development pro forma and explain what it will take to make housing more affordable, and get lots of it built.
Cover photo by Hermes Rivera on Unsplash
Spain is a beautiful country and lots of people want to visit and/or buy property there. But here's what Prime Minister Pedro Sánchez recently had to say about this:
Just to give an idea, in 2023 alone non-European Union residents bought around 27,000 houses and flats in Spain. And they didn't do it to live in them, they didn't do it for their families to have a place to live, they did it to speculate, to make money from them, which we – in the context of shortage that we are in – obviously cannot allow.
And by cannot allow, he means that Spain is preparing to implement a 100% tax on property purchases made by buyers of non-EU countries, such as the UK. It's not quite a foreign buyer ban, but it's certainly a punitive tax that should, in theory, dissuade the majority of buyers.
I am, however, unclear as to how this will interact with Spain's golden visa program. For over 10 years, Spain has been encouraging foreigners to buy real estate in the country (minimum value of €500,000) in exchange for permanent residency.
Will this program remain, and will these foreign buyers now be taxed at 100%? Or will permanent residency also exempt you? I don't know.
Whatever the case, it is yet another example of government trying to appear as if they're doing something meaningful about housing affordability. You might also remember that, last year, Barcelona came out with a complete ban of short-term rentals starting in November 2028.
But once again, I think it's important to remember that economics is the study of choice and that there are always tradeoffs. A decision in one place, will create second-order consequences somewhere else.
Approximately 41% of the YTD population growth in Canada this year has been in Ontario. Here's a slide from a recent presentation by Zonda Urban:
So there's an argument to be made that demand is still outpacing new housing supply in most of our major markets:
Why then are new home sales continuing to slide? A reasonable answer would be that -- by design -- this new housing isn't attainable to most:
The result seems to be a long-term structural shift toward more rental housing:
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