April 7th | Canada is planning to double housing supply
Spending on increasing supply
With the federal government continuing to accelerate their affordable housing strategies, Canadians are wondering how housing markets might react. The first thing to note is that the government is investing $72 billion over the coming years to double the development of new homes, most of which is going towards construction and maintenance of rental units and affordable housing, with an additional $4 billion invested in the Canada Mortgage and Housing Corporation for the Housing Accelerator fund, and 4.4 $billion for financing greener affordable housing. Further, provincial governments are being tasked with investing in transit to support the infrastructure needs of housing initiatives.
Taxes for making things more affordable
In addition to new homes, the government is leveraging tax credits to incentivize renovating existing homes into multi-generational households to reduce demand for existing homes. To help Canadians buy their first home, a Tax-Free First Home Savings Accounts (similar to a TFSA) is being instituted to help potential homeowners save up to buy their first home, alongside doubling the First-Time Home Buyers’ Tax Credit. Similarly, Rent-to-Own projects are being financed to increase flexibility in homeownership.
To further reduce the price of housing, the federal government is continuing to fend off foreign speculation on Canadian homes, although Real Estate experts argue that foreign speculators only make up a small part of the forces pushing up demand for housing.
How might this affect housing markets?
Although supply of homes is set to increase and the government is trying to suppress demand, incentivizing first-time homebuyers is likely to continue supporting prices, what might change is what type of homes are in demand; unit based and rental housing might see a spike as first-time buyers look to their most affordable option, and developers are likely to focus on building smaller homes on less land to reduce the costs on homebuyers. Consequentially, the price of vacant land and of executive homes could experience modest appreciation as they are replaced with affordable housing.
Albeit that, the government has noted that global inflation is on the rise with global productivity on the decline, although Canadian performance and job growth are relatively strong. As such, the short-term outcomes on Canadian housing markets remains questionable; will inflation appreciate prices considering federal efforts to reduce demand, or will housing markets succumb to global market downfalls, and is it time to hedge your bets?
Media Relations, The Lind Realty Team.
Do you have any questions concerning Ontario housing markets, or on the value of your home? Contact us, to learn more!