Budget 2022: Housing supply gets $10B boost; Feds add measures to curb speculation

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This article was published 06/04/2022 (948 days ago), so information in it may no longer be current.

TORONTO – The Liberal government will try to ease Canada’s housing crisis with more than $10 billion in funding meant to speed up home construction and repairs along with measures to cool the market and help those trying to buy their first home.

“The central challenge in Canada when it comes to housing is a lack of supply. And this budget is about tackling that head on,” said Finance Minister Chrystia Freeland in a press conference Thursday afternoon, before the government unveiled its latest federal spending plans.

Freeland has committed to doubling the number of homes built each year over the next decade to about 400,000 to help meet the 3.5 million homes the government estimates are needed by 2031, but the plans rely heavily on co-operation with other levels of government and the private sector.

“We recognize the federal government does not have all the tools to increase housing supply, so we’ve tried to be really creative and put forward ways that the federal government can work with municipalities, provinces and territories to drive housing supply,” said Freeland.

The spending includes $4 billion in a broad accelerator fund for municipalities to help with planning and delivery of housing, with a target of 100,000 new units over five years.

There’s also $1.5 billion over two years for upwards of 6,000 new affordable housing units through the Rapid Housing Initiative, $475 million for those facing affordability challenges, and the acceleration of $2.9 billion in already promised spending through a co-investment fund to provide housing to vulnerable Canadians.

Other measures include $150 million for affordable housing in Northern Canada over the next two years, more than $600 million for new and existing programs to address homelessness, money reallocated to co-operative housing, and just over $1 billion for a variety of home energy efficiency initiatives, including loans and grants for greener affordable housing.

Commitments also include $4.3 billion in spending for Indigenous communities over seven years, including $2.4 billion for on-reserve housing, though those figures are far short of what advocates say is needed.

The Liberals say they will also leverage more than $40 billion in infrastructure funding to push cities and provinces to act faster on housing.

The efforts to boost supply come amid an overheated market that saw prices climb more than 20 per cent since last year to hit a record $816,720 in February, while rental rates have also been rising.

The budget will strive to deliver some pricing relief by banning foreign buyers from home purchases for the next two years, though there are exemptions for permanent residents, international students and refugees, and to tax home sales within a year of purchase as business income, though there are numerous exemptions for major life events.

The Liberals have also announced a review of how much large companies buying homes is affecting the market, and what options such as tax measures they have to address the growing trend, but made no policy commitments on the issue.

The government however needs to move faster to counter housing becoming an asset class, said Ricardo Tranjan, Ontario senior researcher at the Canadian Centre for Policy Alternatives, in a release.

“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 by working families.”

He said there were encouraging signs on housing but that the government should be making programs like the Rapid Housing Initiative permanent.

“The federal government is definitely back into the housing game — and that’s good news — but there’s room to go bolder and do more for tenant families.”

The budget also includes measures to help people trying to get into the market, including a new savings account and changes to the first-time homebuyers tax credit.

Homebuyers in general will gain more protections through a bill of rights that is proposed to include a right to a home inspection, an end to blind bidding — a widely-used practice where sellers don’t disclose competing bids — 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 how homes are sold, which include the end to blind bidding, would undermine consumer choice.

“The commitment to ban the traditional offer process is a massive step back. It would unfairly target the financial nest egg of hundreds of thousands of families,” he said in a release.

There are, however, signs that the real estate industry is coming around to more transparent bidding after the Canadian Real Estate Association committed on Wednesday to pilot real-time tracking of bids on homes.

This report by The Canadian Press was first published April 7, 2022.