As expected, multiple measures to address Canada’s housing affordability and housing shortage crisis figured prominently among the raft of announcements made by the federal government in its annual budget presentation on Tuesday. As a potential home buyer or seller, many of these measures could benefit you in the months ahead if you plan to venture into the Greater Toronto Area (GTA) housing market this year.
Read on for a brief summary of the most significant and impactful measures.
Entitled Canada’s Housing Plan, the federal government’s array of overarching and ambitious policy initiatives are aimed at tackling the country’s current housing crunch by focusing on three key aspects—speeding up housing construction, expanding housing supply, and making buying a home more affordable.
Ramping Up Housing Construction
The acute shortage of housing units in Canada continues to be a major impediment for first-time home buyers. The latest federal budget intends to plug this gap by investing an additional $400 million in the $4 billion Housing Accelerator Fund to speed up the construction of an additional 12,000 new homes over the next three years.
Announcing the creation of a new $6 billion Canada Housing Infrastructure Fund, the federal government said it will support construction and upgrades in essential housing infrastructure to facilitate wider homebuilding activities.
A shortage of skilled labor that has stymied housing construction and driven up homebuilding costs will be addressed through a $50 million budget allocation to accelerate the Foreign Credential Recognition Program. This will enable faster integration of skilled trades workers into the Canadian workforce, in addition to an additional $100 million earmarked for skilled trades training, apprenticeship, and recruitment of skilled trades workers.
Expanding Housing Supply
Canada’s extremely limited housing inventory continues to impact homebuying prospects for millions of Canadians and newcomers alike. The federal government intends to lease out existing land owned by government entities, such as federal offices, Canada Post, and the Department of National Defence, for building new housing units or converting existing structures into new homes. It plans to spend $1.1 billion over the next decade to convert half of its federal offices into homes, use about 1,700 Canada post offices across the country to build new housing and redevelop or convert national defence buildings into new housing.
Adding to a previously announced measure to ramp up construction of new apartments, this year’s budget added an additional $15 billion to the Apartment Construction Loan program, which could lead to about 131,000 new apartments being built over the next eight years.
Aimed at encouraging the construction of additional suites or units in existing housing to expand options for potential renters, the Canada Secondary Suite Program, administered by the Canada Mortgage and Housing Corporation (CMHC), will offer homeowners up to $40,000 in low-interest loans to build a secondary suite in their homes.
The budget also makes room for innovative housing projects, such as modular housing, which will receive a $50 million influx through Canada's regional development agencies. Nearly $500 million in low-cost financing will be allocated for builders that use prefabricated or innovative homebuilding techniques in apartment construction.
Tackling Housing Affordability
This year’s budget tackled the predominant issue of housing unaffordability head-on by introducing a wide range of financial stimulus measures that will make it easier to buy a home in Canada. Chief among these is an increase in the Registered Retirement Savings Plan (RRSP) withdrawal limits, which have been raised from $35,000 to $60,000 for individuals and from $70,000 to $120,000 for couples, making it easier for first-time home buyers to cobble a down payment.
A five-year extension to the earlier 25-year mortgage amortization period, mandatory for first-time home buyers, is expected to make monthly mortgage payments more affordable for buyers who will purchase a new home on or after August 1, 2024. Similar provisions in the Canadian Mortgage Charter have also been made for existing homeowners that will help lower their monthly mortgage payments.
Addressing Other Housing Needs
This year’s federal budget also aimed to reconcile current market realities with climate change adaptation needs through a $903.5 million investment to launch a new and revised Canada Greener Homes Affordability Program. It will support energy-efficient retrofits for Canadian homeowners and renters with low to median incomes, making it cheaper to heat your home.
Other measures include combatting mortgage fraud through the use of a new tool administered by the Canada Revenue Agency to verify borrower income for mortgages.
The budget also took into consideration unique home financing needs through its proposal to boost access to community-specific lending instruments, such as Halal Mortgages.
As always, the RE/MAX Royal Team Sachdeva Realty team is available to help put this information in better perspective, based on your individual housing needs. Please do get in touch if you have any questions.
Have a great weekend!