Housing supply

Real estate industry weighs in as Ottawa targets housing supply

The groups say they are encouraged by the measures taken, but not everyone is convinced by the measures

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Housing market watchers have increasingly called on governments to focus on new housing construction to curb soaring house prices, but they were mixed on whether the supply-side measures introduced in the budget will have a major impact.

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Among other housing-related measures, the Liberals said last week that they plan to set aside $4 billion over five years for a Housing Accelerator Fund in partnership with Canada Mortgage and Housing Corporation to develop 100 000 net new housing units. The government also plans to spend $1.5 billion over two years to create 6,000 affordable homes – 25% of which will be for women’s housing – and provide another $1.5 billion in loans and financing. to develop 6,000 cooperative housing units.

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As housing supply is inelastic and takes time to build – especially with delays surrounding planning permissions and supply chain issues – new units won’t come online overnight. , but would be part of a longer-term strategy.

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Some industry groups, like the Toronto Regional Real Estate Board, have been heartened to see this progress being made on the supply side by various levels of government, especially after years of pushing demand-side measures that don’t haven’t done much to solve the problem.

“TRREB is pleased to see measures that the federal budget includes funds to help municipalities modernize their zoning, planning and building approvals processes, so new homes can get to market faster.” , TRREB President Kevin Crigger said in a news release following the budget.

Phil Soper, chairman of Royal LePage, told the Financial Post he thinks the government is right to extend funding to different types of housing, such as entry-level housing, co-op housing and housing in the northern territories.

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“The money they apply in various different buckets will help, Soper said. “It’s an ecosystem, it’s like a coral reef: you need entry-level housing to have healthy mid-level and entry-level, luxury housing. People move through the housing market throughout their lives as their wealth accumulates, their career develops – and part of that puzzle is rental housing, part of that puzzle is affordable housing. If it’s broken at the entry level, the whole housing economy suffers.

But not everyone was sold on the supply measures. John Pasalis, president of Toronto-based housing analytics firm Realosophy Realty Inc., said in a Twitter thread Thursday that anyone who hoped the government took rapidly rising home prices seriously would find that the budget “didn’t delivered on his promises.”

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Pasalis warned that new supply-side policies would need greater intergovernmental cohesion to be effective.

“I’m not optimistic that supply-side policies (for market housing) will have much impact if we don’t have provincial governments motivated to make the necessary changes,” he said. -he writes.

A consensus in the real estate space is that the supply problem will not be solved overnight.

According to the Royal Bank of Canada tally, Finance Minister Chrystia Freeland announced at least 29 new housing measures worth $10 billion over five years.

RBC economist Robert Hogue, who wrote a post-budget report for the bank, did not expect the measures alone to move the needle and bring quick relief to Canadians struggling with housing costs.

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But he suggested the scale of the effort would send positive signals, suggesting the government is working to get the market back on a more sustainable and affordable path.

The average national house price in Canada is now north of $800,000, according to the figures.

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Canada already lags behind other G7 countries in population-adjusted housing stock, according to a May 2021 report from Scotiabank. Chief Economist Jean-Francois Perrault has estimated that Canada would need 1.8 million more homes just to catch up to the G7 average. Most recently, in January, Scotiabank’s economics team singled out Ontario as a particular pressure point, requiring 650,000 homes to meet the national average housing stock per capita. Scotiabank pointed to this imbalance between supply and demand as the underlying cause of affordability issues.

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