Royal Bank of Canada (RBC) has recently come out with a statement that a policy response is necessary to tackle the rising prices and increase affordability.
RBC’s Chief Economist Dawn Desjardins explains that the sharp increase in home prices has been driven by low interest rates, strong demand, and tight supply. With the demand continuing to be strong, she believes that a policy response is necessary to ensure that housing stays affordable.
Desjardins recommends that the government should enact policies that would reduce speculation and encourage more housing supply to ease the pressure on prices. She also suggests loosening regulations to allow more rental housing and expediting the construction of affordable housing units.
Desjardins notes that while the current surge in house prices may seem unsustainable, she does not favor the idea of regulations to limit price increases. Instead, she argues that it is further government action - such as increased taxes or rules on borrowing - that will help to contain house prices from spiraling out of control.
In summary, the Royal Bank of Canada has recently come out and stated that a policy response is necessary to address the current surging house prices in Canada. The Chief Economist of RBC, Dawn Desjardins, outlines various suggestions for the government to implement, such as reducing speculation and increasing the availability of rental and affordable housing, as well as avoiding regulations to contain house prices. These actions are necessary to guarantee that Canadians can still access the housing market without prices becoming unattainable.
This article was contributed on Oct 21, 2023
