Hon. Robert H. Winters (Minister of Public Works):
Mr. Speaker, I should like to inform hon. members that the maximum selling price policy Central Mortgage and Housing Corporation has been following in one form or another since 1946 will be discontinued effective today. As- hon. members are aware, when a loan under the 1954 National Housing Act to a merchant builder was approved in respect of a house built for sale, a condition was imposed to the effect that only 90 per cent of the amount of such approved loan was advanced unless the house was sold at or below a price determined by C.M.H.C.
This policy was introduced to protect prospective home owners against unduly high prices which might otherwise have resulted under pressure of economic conditions which were encountered from time to time almost continuously since 1946. Conditions are now such that the continuation of this policy seems no longer warranted. In 1954 housing starts, including conversions, numbered 117,800, and completions 106,400. These are all-time records. As of January 1 there were approximately 71,000 houses under construction. New supplies of housing are such that competition itself can now provide a good measure of price limitation.
Our statistics show that approximately 70 per cent of the houses built by merchant builders under the National Housing Act are being sold at the maximum price as determined by Central Mortgage and Housing Corporation, 25 per cent are being sold below this price, and 4 per cent to 5 per cent above it. There has been a tendency since the new act came into force for the proportion of houses selling below the maximum sale price to increase.
The percentages that I have just mentioned are on a national basis. They vary somewhat from one locality to another. There are indications that in some areas the so-called maximum selling price has ceased to be a maximum and has become in effect a floor price. In other words, the ceiling price 50433-46
set by the corporation is susceptible to representation to purchasers as being the price at which the house must be sold.
I should not like to leave the impression that the discontinuation of the maximum sale price policy will at once reduce prices all across the country. In some areas and for some types of houses there may be a moderate tendency towards higher prices for a short period. However, the removal of control generally will stimulate competition in the house building industry and the home owner will in the long term, I believe, get more value for his housing dollar. That is the purpose of this move.
It is desirable that the maximum sale price restriction should be removed before the commencement of the building season. Therefore, as of today the policy will be discontinued. This will have application not only to houses to be started in the future but in respect of houses that are now subject to the price limitation but which have not yet been sold.
Subtopic: CENTRAL MORTGAGE AND HOUSING
Sub-subtopic: SELLING PRICE POLICY