Finance Minister Chrystia Freeland said Friday that the federal government is ready to take “additional measures if needed” to help housing affordability.
“Our government is completely focused on housing affordability, on ensuring that Canadians — Canadians who want to buy a home — are able to buy a home, and on ensuring that Canadian renters are able to find a good, decent place to live,” Freeland told reporters in Nova Scotia.
“This is a market where conditions are changing and we are monitoring the situation closely, ready to take additional action if necessary.”
Budget 2022 – A tax-free savings account is coming for first-time homebuyers
Her comment comes months after the Liberal government promised to spend more than $10 billion over the next five years on affordable housing – but affordable housing remains out of reach for many.
What happens to housing?
The median sale price of a home in Canada rose more than 50 percent between February 2020 and February 2022, according to Reuters, which cited data from the Canadian Real Estate Association (CREA).
According to one study, this reality hits Canadians.
A study conducted last month by Professional Accountants in Canada (CPA Canada) found that half of homeless Canadians believe home ownership is still a long way off — even though prices have fallen slightly across the country.
Nearly 90 percent of respondents said they see higher interest rates as the biggest obstacle to entering the housing market as borrowing costs rise.
The housing market in Canada is falling as prices rise. But rentals have never been hotter
At the same time, as a result of rising interest rates, the housing market began to cool.
The Real Estate Investment Authority said last month that home sales in June fell 24 percent year-on-year, following a trend that has seen housing activity slow dramatically since April after the central bank began raising its key interest rate in March.
Meanwhile, the median home price fell 1.9 percent month-on-month in June — but remained 14.9 percent higher from the same period last year.
However, this development has put pressure on the tenants. The rental market continues to swell amid demand from those who choose not to buy due to rising inflation.
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Average rent for all Canadian properties was $1,885 per month in June, according to Rentals.ca, an increase of 9.5 percent annually.
What have liberals done for housing affordability so far?
The Liberal government has made a number of promises aimed at addressing the issue of housing affordability. This is where those pledges stand.
Tax-free first home savings account
The 2022 budget outlines plans to create a new Tax-Free Home Savings Account (TFFHSA) to help Canadians struggling to enter the housing market to save on down payment.
Real estate aspirants will be able to save $8000 per year with a maximum of $40,000 per person towards the purchase of their first home. If buying as part of a family, each individual who puts money into buying a home can save on their own TFFHSA.
Bidding wars are a thing of the past in the once-hot Calgary housing market
As the government moves forward with its plan to set up the new savings account, the new tool will not be available until next year, according to the government.
The budget also proposed doubling the tax credit for first-time homebuyers to $10,000, retroactively for any homes purchased after January 1, 2022 — however, the government webpage still lists only the $5,000 credit, indicating that this change has not taken effect. distance .
Building 400,000 new homes
The government has promised to build about 400,000 homes a year over the next decade to help increase the housing supply, a move advocates say is an essential part of the housing affordability equation.
Construction has failed to keep pace with the country’s population growth — in fact, a report published by Scotiabank last year found Canada to have “the fewest number of housing units per 1,000 residents of any G7 country.”
However, it is not clear that there are enough workers to build it.
About 286,000 new homes are currently built each year, according to 2021 data from the Mortgage and Housing Corporation of Canada (CMHC).
Canada wants to build 400,000 homes a year. Who will build them?
Jean-Francois Perrault, chief economist at Scotiabank, said in an interview with Global News in April.
In the months since that interview, labor shortages have continued to hamper the construction industry. According to figures released by Statistics Canada in June, hiring skilled employees remains an obstacle to only 50 percent of construction work.
Home Buyer’s Bill of Rights and a one-time payment
The government has promised to explore the Home Buyer’s Rights Act and allocate a one-time $500 fund to “those facing housing affordability challenges.”
However, when it comes to payment, the details remain vague. When the budget was revealed in April, the government said the details and method of providing this support would be announced “at a later date”. So far, there has been no announcement.
As for the bill of rights for homebuyers, the budget only made plans to consider such a document – nothing concrete was included at that time, and such an exploration has not appeared since.
– With files from Global News Craig Lord and The Canadian Press
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