The federal government must act with speed and precision to make the most of the new investments announced in the federal budget to address the housing crisis in Canada.
Posted yesterday at 9:00 a.m.
The $10.2 billion initiatives to accelerate the construction of new homes and help first-time home buyers offer good triggers, but implementation will be key to achieving quick wins that will bring Canadians much-needed housing assistance.
In terms of housing supply, the federal, provincial and municipal authorities responsible for this file must ensure that the diversity of housing units built is part of the entire housing continuum to meet the variety of needs. Canadians in this regard.
The budget paves the way for this development by proposing various means of increasing the supply of housing.
While municipalities are at the forefront in this regard, they are often constrained by a lack of tools and resources. In this sense, the government’s $4 billion investment in the Fund to Accelerate Housing Construction, which aims to reduce delays in zoning, approvals and issuance of permits, is good news.
Housing cooperatives, on the other hand, offer an efficient business model in terms of housing: they take into account the mix of incomes, offer rents adapted to the means in the same housing project and have the capacity to maximize the socio-economic benefits of diverse communities.
However, housing co-ops and municipalities have historically focused on the so-called “subsidized” part of the housing continuum, which means that tenants pay less than 80% of market rents. The federal government should use its strong powers of moral suasion to ensure that housing supply will also meet the needs of unsubsidized and modestly subsidized tenants.
A step-by-step approach
With regard to housing demand, the government’s approach is more gradual. Among other things, the new tax-free home savings account and rent-to-own initiatives offer innovative features and will help Canadians save more to buy their first home.
Starting next year, the new savings account will allow Canadians under 40 to deposit up to $8,000 per year into the account in the most tax-efficient way, for a lifetime maximum. of $40,000. For a couple saving for the purchase of a home, the savings can reach $80,000.
This initiative could encourage some first time buyers to delay buying a home in the short term in order to get the most out of this savings program. The capital leasing program, on the other hand, is specifically aimed at providing more time and support to tenants who want to buy a home.
These programs may actually reduce the immediate demand for homeownership in some markets.
Similarly, the ban on foreign investors from acquiring non-recreational residential properties for a period of two years aims to reduce the pressure exerted by these market players. The extent of foreign investment in the Canadian housing market remains largely unknown, and the budget measures provide a number of legitimate exemptions.
The budget also contains the announcement of a one-time payment of $500 for low-income households to help them cover rent increases. Since this is a one-time payment, it is not expected to drive up rental costs.
The net impact of these measures may seem modest, but any contribution that will moderate demand could help more Canadians find housing.
No quick fix
Although some may view demand-side measures as more limited, this policy of small steps is warranted. Mortgage rates, the main driver of housing demand, are on the rise and could help cool a hot Canadian housing market. Clearly, there is no silver bullet to soaring house prices.
Targeted demand-side measures combined with rapid supply-side measures strike the right balance and are a prudent approach. Now let’s see how all these pieces will fit together. Implementation of measures and attention to all market segments will be essential to the success of this new series of housing initiatives.
While the government has worked hard to make it easier for low-income Canadians to access subsidized housing, now is the time to increase the supply of housing for middle-class Canadians, which includes the supply rental housing at market rates and affordable home ownership. Only then will we achieve the goal of Canada’s National Housing Strategy, which is to “create innovative housing and provide a place to call home for more Canadians”.