The federal government’s latest budget designed to tackle the soaring cost of housing does little for those who need the most help, according to several experts.
“There’s a lot of smoke and mirrors here,” said David Hulchanski, a housing and community development professor at the University of Toronto.
Federal Finance Minister Chrystia Freeland said in the House of Commons Thursday housing is the “most pressing economic and social issue in Canada today,” and thus, the centrepiece in the Liberals’ budget. The numbers underscore the urgency of the problem. Prices are so high in most markets across the country that nine out of 10 aspiring home buyers surveyed in a recent poll said they’ve all but given up on their dreams of owning a home.
The average price of a home in Canada has doubled since the Liberals took office in 2015, reaching $816,720 in February. That figure is far steeper in the Greater Toronto Area, creeping up nearly 28 per cent year-over-year to reach $1.3 million in February.
But Hulchanski said the measures outlined by Freeland Thursday won’t actually make a big difference overall.
Her slimmed down budget included a doubling of the First-Time Homebuyers’ tax credit, providing up to $1,500, establishing a tax-free savings account for those looking to buy their first home, and a one-time $500 payment to “those facing housing affordability challenges.”
Hulchanski said these measures stimulate demand, which is already high and contributing to the skyrocketing prices in the first place.
“[The government is] playing a very … petty politics game of votes in and around Toronto and Vancouver,” he said.
Measures help at ‘a certain income threshold’
To increase supply, the federal Liberals are launching a launching what they call a “Housing Accelerator Fund” to streamline the approvals for municipalities to build new subdivisions.
“It’s definitely helping those at a certain income threshold,” said Nemoy Lewis, an assistant professor at the School of Urban and Regional Planning at Ryerson University.
“Providing just supply doesn’t necessarily mean that it’s going to equate to affordability.”
Lewis said the people who will be able to take advantage of a tax-free savings account are those who have money to save in the first place, which isn’t always the case with the lower and middle income earners
Hulchanski said the $562 million over two years for the “Reaching Home” federal homelessness strategy wasn’t actually all that significant compared with what’s budgeted for prospective homeowners.
Foreign home buyers
The budget also contains a temporary ban on foreign home buyers for two years, but John Pasalis, president of Toronto real estate brokerage Realosophy Realty, said they represent just a fraction of the market.
“It’s not the primary driver of rapidly rising home prices,” he said.
Statistics Canada has released figures that show Ontario’s non-resident ownership rate was 2.2 per cent in 2019. There are many exemptions, as well, including permanent residents and foreign students and workers. People buying their primary residence are also exempt.
“[This] means it’s probably unlikely to have much of an impact at all,” he said.
Ontario housing strategy
However, the Ontario government is applauding the federal budget, saying it will complement its own plan. At Queen’s park Thursday, Minister of Municipal Affairs and Housing Steve Clark said Ottawa’s plan “will build upon the success of what the premier and I announced in January,” a $45-million effort to speed up development approvals.
Last week, Ontario tabled its own housing bill which, in part, focuses on streamlining planning at the municipal level, suggesting the local approval process in place slows down home construction and drives up prices.
Ontario NDP Leader Andrea Horwath said her party is “optimistic” restricting international home buyers will help, but blamed the Progressive Conservative government of Premier Doug Ford for not doing more to protect renters and stop speculators.
In a statement, Ontario Liberal Leader Steven del Duca also took aim at the Ford government.
“The federal Liberal government is doing the heavy lifting, and the Ford Conservatives are along for the ride.”