Look for measures to make housing more affordable in federal budget

By
Millicent Wong
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Look for measures in next month's federal budget to make housing more affordable in Canada, says CIBC economist Benjamin Tal.

Canada's housing affordability crisis is expected to be a key focus of the budget when it is delivered on April 16, and Canadians can expect more affordability measures, said Tal, deputy chief economist at CIBC Capital Markets.

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“The government is aware that housing is an important issue and that the next election will be all about housing,” he said in a recent interview with Larysa Harapyn of the Financial Post.

An incentive for first-time homebuyers is at the top of Canadian homebuilders' wish lists.

Ottawa has determined that Canada needs to build 5.8 million homes over the next decade to meet housing needs, doubling housing starts at a time when construction is slowing, said Kevin Lee, chief executive of Canadian Home Builders' Association (CHBA).

CHBA's real estate market index, which reflects industry sentiment, fell to a record low in the fourth quarter of 2023.

The CHBA is recommending that the government reintroduce the 30-year amortization of insured mortgages for first-time buyers of new homes to help them overcome financial hurdles and boost the construction of more homes.

“We help first-time home buyers transition to a 30-year term [amortizations] would be what we need to really change the equation,” he told Harapyn in an interview.

Lee said measures to reduce hurdles for developers and scrapping GST on purpose-built rental properties were “steps in the right direction” but were particularly for the long term.

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Even the interest rate cuts expected this year will not be enough to turn the tide on the country's housing supply.

“We need to continue to see holistic change on the policy front,” Lee said.

Builders also hope the federal budget will provide help in expanding the construction industry's workforce, as 20 percent of workers will retire within the next decade.

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“We have a very tight labor market and we need support there,” he said.

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