Reducing inflation and maintaining interest rates will help solve the nation's housing shortage in Canada

Canada's shortage of affordable housing is a very serious problem that can be addressed as inflation falls and interest rates become more predictable. Newly appointed Housing Minister Sean Fraser said this in a conversation with Reuters on Tuesday.

Fraser, who previously served as Minister for Immigration, Refugees and Citizenship, has been appointed to the new position as part of a major rearrangement in the cabinet of ministers. The appointment is intended to focus on housing costs. The Liberal Party, which is Canada's ruling party, and current Prime Minister Justin Trudeau are rapidly losing popularity, with the Conservatives accusing the Liberal government of poorly managing the economy and making housing unaffordable. The next election is due in October 2025. It is believed that Trudeau plans to participate in them, and the recent cabinet shake-up should help improve the situation and prepare for the upcoming election.

Housing is one of the issues for which the opposition has been particularly critical of the Liberal government. Last week, Conservative Leader Pierre Poilievre cited data that shows that since the Liberal Party took power in 2015, rents and mortgage payments have roughly doubled.

One of the reasons for the housing crisis, critics say, is the immigration plan, under which Canada attracts more than 400,000 people a year, or about 1 percent of the country's population. At the same time, the Conservatives say the Trudeau government is not addressing the issue of where the newcomers will live.

Housing construction in Canada is usually dealt with at the local level by provincial and municipal governments. However, in 2022, the federal government announced plans to double housing construction over the next decade. Nevertheless, this year, the volume of new housing starts will drop to 212 thousand units, down from 262 thousand last year.

Sean Fraser stated that housing construction in the country has been hit hard by the COVID-19 pandemic. It has disrupted supply chains, which has increased the cost of housing construction. The economy is also playing its part in the issue. In July, the Bank of Canada once again raised the interest rate. However, inflation fell to 2.8% in June.

Fraser believes that reducing inflation and keeping interest rates stable will give the construction industry more confidence for the future.

"We have an opportunity under this new, more stable environment ... to make a major difference," Fraser shared with Reuters.

Also, the former immigration minister, despite criticism from the Conservatives, ruled out changing Canada's immigration policy:

"The answer to our housing challenges is not to welcome fewer newcomers. The answer to our housing challenges is to build more houses."