Conservative down payment pledge ‘can’t be delivered’: expert

Imagine a situation in which you could save up enough money for a down payment for the average Vancouver home in about four or five years.

According to a recent tweet from Conservative Leader Pierre Poilievre, that was the case before Prime Minister Justin Trudeau came to power — and he plans to make that a reality once again if his party eventually forms government.

But the numbers tell a different story about the situation in 2014, and one expert suggests it’s an unrealistic goal for a federal government to engineer that scenario in B.C.

During a stop in New Westminster on Tuesday, CityNews asked Poilievre about that Tweet and whether he stood by the claims it outlined.

“That claim, I don’t remember exactly what post you’re talking about. We have lots of posts,” Poilievre said, before commenting on the rising cost of housing since the Liberals formed government in 2015.

“If I can be blunt, across Canada, housing was cheap when Justin Trudeau took office. Very cheap.”

The price of homes across Canada have risen significantly since the Liberals formed government in 2015. But Paul Kershaw, a professor of policy at the University of British Columbia, says Poilievre’s assessment that people could have saved up a down payment within half a decade in the period around 2014 is off-base.

“I’d like to applaud Mr. Poilievre for the level of ambition,” Kershaw told CityNews in an interview. “I don’t want to come across as anything other than celebrating the ambition that a potential prime ministerial candidate wants to restore housing affordability forever to levels we witnessed some decades ago. Wonderful. The ambition should be celebrated,” he said.

“I think there [are] some problems with the data he’s suggesting. It is the case that back in the mid-1970s, whether in Metro Vancouver, or B.C. or across Canada, it’s true — you could work as a young person for four or five years and save a 20 per cent down payment on an average-priced home.”

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But for a down payment in 2014, Kershaw, who also founded Generation Squeeze — a think tank focused on addressing generational inequality — says his research indicates it would have taken 21 years to save a 20 per cent down payment for an average Metro Vancouver home. 

He says that extended to 27 years by 2022.

As for the prospects of a potential Poilievre government introducing policy aimed at pushing prices down to shorten the period a person or family in B.C. would need to save for a down payment to four or five years, Kershaw is frank.

“I applaud the ambition of Mr. Poilievre,” Kershaw said. “I will raise questions with the degree to which I worry he is setting up people’s expectations for something that can’t be delivered, which then not only undermines potential trust in his own credibility but trust in politicians more generally.”

Kershaw says there’s no doubt housing affordability has eroded during the Liberals time in power, but he points out it’s a cross-partisan problem, highlighting the fact house prices have risen faster than incomes under the NDP in B.C. and the Progressive Conservatives in Ontario in recent years.

Rising home prices a global issue

In assessing Poilievre’s criticism of Canadian home prices rising during Trudeau’s time in power, Tom Davidoff, an economist at the University of British Columbia, suggests we should also examine developments in other parts of the world.

“It’s global,” Davidoff told CityNews. “The U.S. has gotten much, much more expensive. We’ve seen that in Europe as well over the last decade. So, some of that is much lower interest rates until recently that pushed up prices. Interest rates have risen but we haven’t seen [home prices] correct. And to do a more full calculation, you’d have to look at — were mortgage payments more affordable? So, rates may have been a bit higher back in 2014, certainly, than they were a couple of years ago.

“Whether payments were more affordable than today, or certainly than a year ago, at today’s interest rates payments are going to be highly unaffordable for most people — and the down payment problem is real. But, again, a lot of that is seen globally.”

As for Poilievre’s criticism of what he calls Trudeau’s “inflationary deficits” contributing to surging home prices in recent years, Davidoff believes there’s something to that.

“There is a link between fiscal policy and inflation,” Davidoff said. “When you have low taxes or high spending and the government’s running deficits, that tends to be inflationary. You stimulate the economy, there’s more money sloshing around, and prices go up.”

Davidoff contextualized that further by suggesting it was appropriate for the federal government to run deficits at the peak of the pandemic in order to prevent the economy from falling apart.