High price tags mean home ownership is nothing more than a pipe dream for many of the country’s millennials.
Finance Minister Bill Morneau says he wants to do something about it. He made his intentions known after a pre-budget speech in Aurora, Ont. yesterday but didn’t provide details.
Yahoo Finance Canada requested more details but has not received a response yet.
“Given that the federal government appears to remain strongly in support of the mortgage stress tests – I don’t see the federal government introducing policies that allow first-time buyers to borrow more to buy a house,” Pasilis told Yahoo Finance Canada.
“I suspect changes may include an increase in the amount first time buyers can withdraw from their RRSPs to use as a down payment (currently only $25,000) and perhaps an increase in the First Time Home Buyer’s tax credit and New Housing GST rebate.”
No silver bullet
UBC professor Paul Kershaw says there’s no silver bullet to making housing more affordable for young Canadians.
“What we need to do is modernize outdated policies that make the regular housing market inefficient (by limiting supply through zoning that privileges limited density; and by exacerbating demand by sheltering housing from taxation in ways that most other assets are never sheltered); as well as scale up the permanently affordable supply of housing,” Kershaw told Yahoo Finance Canada.
The Liberals announced a 10-year, $40-billion National Housing Strategy in 2017. It was intended to increase the supply of affordable housing and reduce homelessness. Kershaw says the plan only scratches the surface and notes actual federal spending is closer to $16-billion.
“The National Housing Strategy remains quiet about the federal role in supporting communities to limit the purchase of homes exclusively for renting out to visitors, rather than long-term residents working or studying in our communities, and has largely left conversations about policy tools to discourage speculative investors (foreign and domestic) and empty homes to the provinces,” says Kershaw
“It has made changes to mortgage rules that are designed to discourage new buyers from getting over-leveraged, especially as interest rates are likely to rise.”
Kershaw and Generation Squeeze’s plan to restore housing affordability forever can be found here.