Thank you for inviting me into this conversation.
In my capacity as the global director of The Shift, much of my work has focused on the financialization of housing or the nexus between housing, finance and human rights. I'm also the former United Nations special rapporteur on the right to housing, a position I held for six years between 2014 and 2020.
Let me start here. Canada, like most western developed nations, is characterized by a central contradiction. We have a relatively robust economy as a top 10 performing country in terms of GDP, with an impressive growth rate of about 6.7 per cent as we come out of the pandemic. With this kind of strong economic performance, we would expect to see the distribution of this growth across all social strata. That is, after all, the point of economic growth.
So it's counterintuitive that instead we have growing homelessness and increasing housing unaffordability for low-income renters and also for higher-income earners. This contradiction has deepened with pandemic-related inflation as captured perfectly through the recent celebration by Bank of Canada head Tiff Macklem, who noted the country's strong economic performance derived through real estate transactions and debt, which have caused housing prices to skyrocket.
This fundamental contradiction can be traced to the values embraced by successive governments in Canada, as articulated through laws and policies in the housing and finance sectors, which benefit institutional and other investors. As a result, Canada now has a housing system that has become overly financialized, operating separately from household incomes and housing need.
A financialized housing system is present when single- and multi-family homes become an extractive industry like mining, such that housing is used by domestic and global actors to extract wealth, mostly by those who already have an abundance of it, like pension funds and investment trusts.
The financialization of housing is rooted in the assertion that, given the right legislative and policy conditions, the market will provide what's necessary for the people of this country. The right conditions are things like low interest rates, preferential tax treatment for investors, no regulations on monopoly ownership, weak tenant protections and a seat at political tables for investors to advise governments.
Obviously the facts on the ground now prove that this has been a failed experiment. Value extraction has been confused with value creation, allowing investors to call themselves “value creators” and in the process extract value. Douglas Porter, the head of BMO, recently said—and I'm paraphrasing—that the supply narrative as a solution to the housing crisis that the industry continues to peddle is a myth, a myth that happens to benefit those propagating it.
So what's to be done? It seems obvious that when one set of values no longer produces reasonable outcomes, governments need to embrace another set that will achieve better outcomes. Human rights is the only framework that has as its goal housing equality, inclusion, affordability, adequacy and security. Human rights redefines value creation. It sees value in housing as home. It reorients finance and housing policies to focus on individuals experiencing housing need, not investor or shareholder interests, as is the case in a financialized system. It requires that supply-side solutions are led by and targeted by household demand, not by investors.
Across the world I've seen states grappling with the financialization of housing trying to curb the trend, recognizing that housing is a different sort of business. It's a human rights business that requires proactive measures by government.
Denmark enacted legislation that prevents investors from raising rents for five years. Singapore has introduced heavy taxation on multiple home purchases by a single investor. New Zealand has asked its central bank to consider housing in its setting of monetary policy. Spain has enacted national right to housing legislation, which penalizes owners who leave homes empty and imposes rent caps on landlords across the country. The city state of Berlin is contemplating the socialization of private market units.
I'll end by emphasizing this. If you embrace the human rights framework as articulated in the National Housing Strategy Act, and if you breathe life into it by committing to ensure that every fiscal and monetary policy or law has, as its end goal, ensuring adequate, affordable and secure housing for those in need, you cannot make a wrong step.
I look forward to taking your questions. Thank you.