More from Alan Freeman available More fromavailable here

When you’re faced with a raging brush fire, you can try to douse it or leave it alone and hope that the blaze dies out. If you’re Stephen Harper, you look for the closest can of gasoline.

That’s just what the prime minister proposed doing when he brought his campaign bus to a new home development in the sprawling Toronto suburb of Vaughan last week and highlighted his pledge to increase the home ownership rate of Canadians.

If re-elected, Harper said, his goal would be to boost the home ownership rate to 72.5 per cent of Canadian households from the current record level of 69 per cent (according to the 2011 census). That would mean an extra 700,000 homeowners within five years.

He then trotted out a list of campaign promises aimed at getting more Canadians to become homeowners, including an expansion of the home buyer’s plan that allows taxpayers to borrow from their RRSPs to buy a home and establishing a permanent home renovation tax credit. According to the Tory leader, home ownership “provides Canadians with financial stability and strengthens communities.”

But adding incentives to home ownership is the last thing Canadians need right now, particularly in the overheated markets of Vancouver and Toronto, where prices of detached homes are already above $1 million and ownership has become a mirage for many potential buyers. The tax system already unfairly favours homeowners over renters, through measures like exemption from capital gains tax. What Toronto and Vancouver need is a correction in house prices, not new tricks to pump them up to still higher and less sustainable levels.

The housing market has been roaring ahead for years, fueled by low interest rates and, in Vancouver and Toronto, by an influx of foreign investors. The International Monetary Fund has noted that Canada is one of the most expensive places in the world to buy a home, using an ownership-to-rent comparison. Even the Canada Mortgage and Housing Corp. has warned that Toronto, Regina and Winnipeg are facing a “high risk” of a price correction because of inflated prices.

What the country needs is a balanced housing policy that encourages home ownership but makes sure that Canadians have a range of housing options, including private rental housing and social housing.

Along with high resource prices, soaring real-estate prices were a cornerstone of Harper’s economic strategy after the crash of 2008, encouraged by low interest rates that made higher house prices seemingly ‘affordable’. We’ve already seen what happened to resource prices. Real estate prices could be the next to go. Along with high resource prices, soaring real-estate prices were a cornerstone of Harper’s economic strategy after the crash of 2008, encouraged by low interest rates that made higher house prices seemingly ‘affordable’. We’ve already seen what happened to resource prices. Real estate prices could be the next to go.

The Liberals are also promising measures to help boost home ownership, anxious to tap into the Tory suburban family demographic — but at least they also talk of measures to increase construction of social housing and tax incentives for rental housing.

The ugly truth is that the Harper government has been a key promoter of the great Canadian housing bubble over the past decade. Along with high resource prices, soaring real-estate prices were a cornerstone of Harper’s economic strategy after the crash of 2008, encouraged by low interest rates that made higher house prices seemingly “affordable”.

We’ve already seen what happened to resource prices. Real estate prices could be the next to go.

After stoking home prices by allowing CMHC to insure interest-only mortgages and extend amortizations to 40 years, the Harper government realized it had gone too far and ratcheted back some of these irresponsible moves. But it was careful to do so with baby steps, fearful of killing the beloved housing boom that was offsetting moribund growth elsewhere and shoring up its core political support among homebuilders, mortgage brokers and real estate agents.

Are higher home ownership rates an unmitigated good? Maybe home ownership is desirable for traditional two-parent middle-class families — but does it necessarily make sense for young people just starting out, for the increasing ranks of singles or for elderly people unable to handle the responsibilities of home ownership?

While 82.4 per cent of what StatsCan calls couple-family households own their own homes, only 48.5 per cent of “non-family” households do. What measures does Harper propose to help these Canadians meet their housing needs?

And what of the impact on labour mobility of home ownership for everyone, particularly in our boom-and-bust resource economy? You can be sure that an oil-worker in Fort McMurray who loses his job has a lot more options for finding employment elsewhere if he is a renter than if he owns a house he can’t sell.

Look at the recent U.S. experience. Home ownership rates south of the border soared to a peak of 69 per cent in 2004, encouraged by policies promoted by the Clinton and Bush administrations which encouraged low-income people to buy houses they couldn’t afford. The housing crash and subsequent foreclosure crisis, prompted by the sub-prime mortgage fiasco, have dropped the ownership rate to 63.5 per cent — and there are no signs of it moving higher.

Home ownership isn’t necessarily synonymous with prosperity. In Europe, the highest home ownership rates are in the former Communist states like Romania, where 95.6 per cent of households own their own homes. Greece, that paragon of economic success, has a home ownership rate of 75.8 per cent, while in Spain — with its stratospheric jobless rates — 77.7 per cent of citizens are homeowners.

The lowest rate of home ownership in Europe? It’s in Germany at 52.6 per cent and Switzerland at 44 per cent. Why? Because of different histories and tax systems that don’t inordinately favour ownership over rental.

Thankfully, we in Canada have not yet had a U.S.-style mortgage crisis. Canadians still are assiduous about paying off their mortgages and arrears are at low levels — but that could change quickly if interest rates rise and real estate prices drop.

We all know that we should be wary of the stockbroker who tells us at the peak of a bull market to pile in and buy shares because prices can only go higher. That’s why we should be worried by Harper’s ill-timed measures to get the votes of would-be homeowners.

Alan Freeman is a Senior Fellow at the University of Ottawa’s Graduate School of Public and International Affairs. He came to the U of O from the Department of Finance, where he served as assistant deputy minister of consultations and communications. Alan joined the public service in 2008 after a distinguished career in journalism as a parliamentary reporter and business journalist for The Canadian Press, The Wall Street Journal and The Globe and Mail. At the Globe, he spent more than 10 years as a foreign correspondent based in Berlin, London and Washington.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.