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Share this Story: How federal party plan to solve the housing crisis following years of failed policies
How federal parties will fix the housing crisis following years of failed policies Trudeau still has a lot of work ahead of him to convince young Canadians who are priced out that he can control runaway home prices. Photo by Various Sources / AFP Files
Article content The soaring housing cost is one of the most pressing issues facing Canadians during the election campaign. NDP and the Conservatives quickly released platforms promising to solve this problem. They used solutions that mainly targeted new home construction and favorable tax measures.
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Article content. The Liberals are not as fast to react in releasing a fully-fledged platform for housing policy. After years of policies that, according to financial watchdogs and real estate analysts, failed to make a difference, Prime Minister Justin Trudeau still has a lot of work ahead of him to convince the priced-out young Canadians that he can control runaway home prices. This video is not loading. We are sorry.
Tap here to view other videos by our team. Refresh your browser or Read How federal parties plan fix the housing crisis after years-long failed policies. Back to video. Although there is no clear platform, the priorities set out by the Liberals in their fiscal update earlier in the year offer a roadmap to their housing strategy. They promise $3.8 billion to build and repair 35,000 affordable housing units. Canadians cannot live on Liberal promises. They need the government to build the homes they make, Jenny Kwan, NDP housing critic, stated last week. Liberals continue to prove that they are only talking and have no plans to take action to improve the lives of everyday Canadians. Canadians deserve better.
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Article content. The federal government budget reiterated its plans to impose a 1-percent national tax upon vacant properties to curb speculative demand. This issue was first raised by Trudeau on the campaign trail in 2019. The tax would apply to vacant residential real property owned by non-resident, Canadian owners. It will be effective in 2022 and could potentially add $700 million to the federal government's revenues over the next four years. Liberals introduced tougher mortgage stress tests, which required Canadian buyers to show that they are able to pay a qualifying interest rate at 5.25 percent when applying for or renewing their mortgage. Canadians cannot live on Liberal promises. They need Jenny Kwan to build the homes they promised Jenny Kwan.
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Article content Many young Canadians are unable to afford homeownership because of the rapid rise in housing prices over the last few decades. The pandemic caused prices to rise due to record low interest rates, and the rush for larger homes in suburban areas that can be used for work from home. According to the Canadian Real Estate Association (CREA) market data, average national home prices reached an all-time high of $716,828 in March. However, they settled at a slightly lower price of $662,000 in July.
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Article content CREA's senior economist Shaun Cathcart stated that the slowdown in sales is not surprising, as March prices were unsustainable. However, affordability continues to be a concern. He said that the problem of high demand and low supply has not improved. After years of consensus that medium-density housing is the future, the Conservatives housing platform was released this week. It includes promises to build one million homes in the next three-years, ban foreign real estate investors for two years, and change the mortgage stress test to benefit contractors, small-business owners, and employees.
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Article content. The NDP has meanwhile committed to building 500,000 affordable housing units in 10 years. They have reintroduced 30-year CMHC insured mortgages for entry-level homes. A 20-percent tax is imposed on homes bought by non-Canadian citizens and permanent residents. It doubles the homebuyers credit to $1,500. And they waive the federal GST/HST cost of new affordable rental units. While the problem of high demand and low supply of housing hasn't gone away, it is worse than Shaun Cathcart. The Liberals introduced a number of measures to counter rising home prices over their two terms of office. However, they have not succeeded as expected. In 2015, the Liberals campaigned for a platform that was mainly focused on building new rental housing through incentives or direct financing.
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Article content The government allocated $20 billion to a 10-year social infrastructure program to build affordable housing. It also suggested that federal land and buildings be evaluated for potential repurposing for low-cost housing. In September 2019, the Liberals launched the First-Time Buyer Incentive. The program promises $1.25 billion over three years to increase affordability for first-time buyers. Canada Mortgage and Housing Corp. (CMHC) manages the program. It offers a 10% down payment for a new home and a 5% rebate for resale properties. The government of Canada shares the upside and the downside of the property's value.
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Article content Few Canadians have been eligible. According to April figures, only 9,108 applicants had been approved for the incentive, which was disbursed at $170 million. With a platform that included updated housing promises such as an increase in the First-Time Home Buyer Incentive, which is available to people living in Victoria, Vancouver, and Toronto, and a one-percent tax on properties owned non-residents, non-Canadians, the Liberals were elected minority government in 2019. Other measures included interest-free loans of up to $40,000 for retrofitting properties, and grants to citizens who purchase zero-emission homes. In a recent report, the Parliamentary Budget Officer (PBO), stated that the federal government's national housing strategy had little impact on the housing crisis during its first three-year period.
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Article content Budget officer Yves Giroux pointed out that this was due to factors like a 15% decline in real purchasing power for federal spending on housing programs, the ending of bilateral agreements between the CMHC and the provinces regarding community housing support and delays in the CMHCs capital contributions program. Read More on this Topic Opinion: To truly afford housing, slash taxes, de-egulate housing, and address inflation. Philip Cross: Despite Trudeau's shrug, an election can be a great time to discuss monetary policy Philip Cross says that cutting spending is Canada’s best way to get out of debt. Some real estate professionals give the Liberals a poor rating because of their housing approach. John Pasalis, president and CEO of Realosophy Realty Inc. a Toronto-based data company and real estate brokerage, described the changes over the years as "relatively poor".
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Article content Besides the great acceleration in construction and purpose built rentals, it is also true that house prices in Canada, or at least resale, have soared under the Liberal government from 2015 to 2015. Pasalis stated that the rapid growth of immigration and population in a market that is not a good place for investment has contributed to rising house prices. He suggested that a platform party on housing would encourage more supply to help Canadians treat their homes as a home and not an asset. From the demand side, I feel that the federal government should look at policies that make it harder for investors to access the market and more accessible for end-users. In some ways, investors' underwriting should be tighter, and then eventually, lending should be easier to first-time borrowers. Thats kind of what I think we should be moving towards. Email: shughes@postmedia.com | Twitter: StephHughes95
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