TORONTO – The Liberal government will try to ease Canada’s housing crisis with more than $10 billion in funding to speed up home construction and repair, as well as measures to calm the market and help those trying to to buy their first home.
“The main challenge in Canada when it comes to housing is the lack of supply. And this budget is about tackling that problem head-on,” Finance Minister Chrystia Freeland said at a news conference Thursday afternoon, before the government unveiled its latest federal spending plans.
Freeland has pledged to double the number of homes built each year over the next decade to around 400,000 to help meet the 3.5million homes the government estimates will be needed by 2031, but plans rest heavily on cooperation with other levels of government and the private sector.
“We recognize that the federal government doesn’t have all the tools to increase housing supply, so we’ve tried to be really creative and come up with ways for the federal government to work with municipalities, provinces and territories to boost housing supply,” Freeland said. .
The spending includes $4 billion in a sweeping accelerator fund for municipalities to help with housing planning and delivery, with a target of 100,000 new units over five years.
There is also $1.5 billion over two years for more than 6,000 new affordable housing units under the Rapid Housing Initiative, $475 million for those facing affordability challenges and the accelerating $2.9 billion in spending already promised through a co-investment fund to provide housing for vulnerable people. Canadians.
Other measures include $150 million for affordable housing in Canada’s North over the next two years, more than $600 million for new and existing programs to address homelessness, funds reallocated to housing cooperative and just over $1 billion for various home energy efficiency measures. initiatives, including loans and grants for greener affordable housing.
The commitments also include $4.3 billion in spending for Indigenous communities over seven years, including $2.4 billion for on-reserve housing, though those numbers are well below what advocates say is needed.
The Liberals say they will also mobilize more than $40 billion in infrastructure funding to push cities and provinces to act faster on housing.
Efforts to boost supply come in an overheated market that has seen prices climb more than 20% since last year to a record high of $816,720 in February, while rental rates have also risen.
The budget will seek to provide some price relief by prohibiting foreign buyers from buying homes for the next two years, although there are exemptions for permanent residents, international students and refugees, and tax home sales within one year of purchase as business income, although there are many exemptions for major life events.
The Liberals also announced a review of the extent to which big business buying homes are affecting the market and options such as tax measures available to them to deal with the growing trend, but made no political commitment to this. topic.
The government, however, needs to act faster to prevent housing from becoming an asset class, said Ricardo Tranjan, Ontario senior fellow at the Canadian Center for Policy Alternatives, in a statement.
“This is yet another budget without measures to curb the financialization of housing. By this time next year, even more homes will be owned by speculators rather than working families.
He said there were encouraging signs on housing, but the government should make programs like the Rapid Housing Initiative permanent.
“The federal government is definitely back in the housing game — and that’s good news — but there’s room to be bolder and do more for renting families.”
The budget also includes measures to help people trying to get into the market, including a new savings account and changes to the tax credit for first-time home buyers.
Homebuyers in general will enjoy more protections through a Bill of Rights which is proposed to include a right to a home inspection, end of blind bidding – a widely used practice where sellers do not disclose competing offers – as well as potential mortgage deferrals and increased disclosures from real estate agents.
Tim Hudak, chief executive of the Ontario Real Estate Association, welcomed the spending commitments but said proposals to change the way homes are sold, including an end to blind auctions, would undermine choice consumers.
“The commitment to ban the traditional bidding process is a huge step backwards. It would unfairly target the financial nest egg of hundreds of thousands of families,” he said in a statement.
There are, however, signs that the real estate industry is turning to more transparent auctions after the Canadian Real Estate Association pledged on Wednesday to pilot real-time tracking of home auctions.
This report from The Canadian Press was first published on April 7, 2022.