Supply shortage, not interest rates, causing housing crisis – Macklem

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“You’re not going to solve housing with low interest rates, and you’re not going to solve it with high interest rates,” Macklem told the committee. “We’ve tried both. And we’ve had high shelter price inflation.”

While calling on the federal government to boost supply in the housing market, Macklem also warned against stoking demand and potentially ramping up home prices further.

Mortgage interest costs, which have skyrocketed throughout the past year as the central bank has raised interest rates, contributed to 28.6% of the year-over-year increase to Canada’s consumer price index (CPI) in December, according to Statistics Canada.

Rent, another leading component of shelter costs, also surged on an annual basis, jumping by 7.7% in December compared with the same month in 2022.

The Canadian Home Builders’ Association (CHBA) recently sounded a dire warning on the housing inventory crisis, with its latest housing market index – released on Tuesday – showing builders remain gloomy about the outlook for home construction.



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