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According to the Governor of the Bank of Canada, half of inflation will come from the housing sector over the next two years.

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We need to build more housing and we need to do it much faster. We could even go so far as to say that Canada, in fact, is invited to take part in a major project to restore access to housing and relieve households who have to deal with ever-increasing costs. It is no longer possible for public decision-makers to watch the parade go by and wait for the market to correct itself.

According to CIBC, it is not 3.5 million additional units that need to be built in the country by 2030, as the Canada Mortgage and Housing Corporation (CMHC) recently stated. 5 million housing units must be added to meet demand and find an affordable market, in the opinion of the institution. It's colossal.

According to a note published Tuesday by economist Benjamin Tal, the Canadian population will increase by 6 million people within seven years. Despite a reduction in the number of foreign students, growth in the number of temporary immigrants will average more than 2% per year by the end of the decade. This means that CMHC's forecast of 3.5 million more housing units by 2030 is much too low.

In addition, CIBC believes that the number of temporary immigrants is underestimated in Canada. According to Benjamin Tal, there are no credible forecasts, objectives or reception plans within governments for non-permanent residents. This migratory segment is, in fact, uncontrolled.

Let us add that the federal government indicated before the holidays that 300,000 to 600,000 people live in irregularly in the country and that these people could be regularized to remove them from anonymity, a proposal that former Supreme Court judge Louise Arbor has been pushing for a long time. These people, absent from the data, necessarily also put pressure on housing.

The economy is capable of absorbing the marked increase in demand at the moment, Bank of Canada Governor Tiff Macklem recently told the Standing Committee finances. The strong population growth is not inflationary, he said, since as demand increases, supply also increases.

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But the housing sector must be excluded from this equation, he clarified. That's 50% of inflation that will come from this sector over the next two years.

It is therefore urgent to review the levels of reception of immigrants in the short term. The federal government has no choice but to calm demand. He will do this by reducing the reception of foreign students, but should we not review, even if only temporarily, the permanent immigration targets? And shouldn't we also regulate the reception of foreign workers?

It is just as urgent to work to improve the housing supply in order to reduce the precariousness of a growing number of households. In Ottawa as in Quebec, more ambition is needed to get builders to launch and relaunch residential projects, especially multi-family building projects.

Certainly, the upcoming drop in interest rates could stimulate construction. But more flexible rules, shorter approval times, more targeted programs, especially for affordable housing and social housing, are needed to help construction.

Why doesn't the Quebec government suspend the QST on new rental housing construction projects? Why is Quebec not following Ottawa, which decided to suspend the GST on these projects?

The latest data from Statistics Canada are worrying, even catastrophic . The value of building permits fell by 14.5% in December 2023 compared to December 2022 in Canada, and by 15.8% in Quebec.

In residential, the drop is 15.6% nationwide, with a 28% slide for multifamily housing. Recently, we learned that housing starts fell by 32% in Quebec in 2023, with declines of 37% in Montreal and 40% in Quebec.

The governor of the Bank of Canada, visiting Montreal on Tuesday, said that monetary policy could not do much to alleviate the housing crisis. However, it is clear that a rate cut could provide relief to many homeowners and construction companies.

The inflation rate in Canada is 3.4%, but excluding housing it is 2.4%, which could give the Bank of Canada room to act quickly. The rise in interest rates, moreover, is currently inflationary.

Is a rate cut possible from March? At Economy Zone on Tuesday, economist Clément Gignac said he believed it was still possible. But private sector economists seem to be leaning more towards April or June.

Regardless, it is up to different levels of government to take the housing issue into account when developing their policies, said Tiff Macklem.

In another economic note published Tuesday, Desjardins affirms that the slowdown in residential construction will continue this year. Continued high interest rates and construction costs, very low builder confidence and labor shortages are all factors pointing to a marked decline in construction activities.

According to Desjardins, there is no notable effect on the affordability of government measures aimed at increasing the housing supply. Of course, we welcome the desire of policymakers to reduce barriers to the construction of new housing, but it will take time for these to arrive on the market.

A proposal that often comes up in the public space is the holding of a summit of the federal government with the provinces and territories to better guide transfers and unblock administrative delays that prevent the acceleration of construction projects. It is urgent that political decision-makers speak frankly to each other.

There are many solutions:

So, we certainly need to calm demand in the short term. But above all, we must stimulate supply in the short, medium and long term.

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