In the face of chronically-low housing supply, the federal government says that it’s willing to help provinces and municipalities increase their inventories in an effort to improve affordability.
At an hour-long virtual event on April 22nd hosted by the Greater Vancouver Board of Trade, Deputy Prime Minister and Minister of Finance Chrystia Freeland said that the federal government wants to work with provinces to increase housing supply in Canada, according to reporting by CTV News.
Freeland said there is more that cities, provinces and Ottawa can do together, but did not provide specific details on what policy options would be on the table.
“Something that we want to work with provinces, municipalities on is really finding more and more creative ways to increase housing supply in Canada,” Freeland said during the online 2021 federal budget event, according to CTV.
“Having said that, I think it’s also important to be sure that there are measures in place to discourage speculation, and in particular measures in place to ensure that houses in Canada don’t become vehicles for storing offshore wealth. That’s not their purpose. Houses in Canada are for Canadian families to live in,” she later added.
The 2021 federal budget, which was delivered in the House of Commons by Freeland on Monday, intends on funding the creation of affordable housing while introducing a one percent national tax on vacant, non-Canadian-owned residential real estate. The budget would provide $2.5 billion over seven years to the Canada Mortgage and Housing Corporation (CMHC) — in addition to reallocating $1.3 billion in funds — to create new and affordable housing.
As CTV reports, Freeland said that the government would take into account concerns from areas like Whistler in British Columbia, where a vacancy tax could be problematic for Americans who own vacation homes in the area.
Alarm bells have been ringing recently over Canada’s housing inventory, with strong buyer demand consistently outmatching supply and causing property values to skyrocket. In a RBC Thought Leadership article published in late March, RBC Senior Economist Robert Hogue said the record-setting pace of sales is a result of low interest rates and the evolving needs of homeowners during the pandemic.
This, in turn, is leading to potentially harmful speculative activity in the market. Purchasers are bidding up properties due to a fear of missing out on being able to afford the home they want to buy. The current environment of rapidly rising prices also creates a view that values will continue to rise indefinitely, leading to more frenzied buyer activity.
To ensure the market cools in a controlled way, Hogue suggested demand-side measures like tightening up mortgage-lending rules. On the supply side, he wrote that policymakers should “redouble efforts” to address the housing supply shortage, including lightening regulatory burdens on new housing projects and adjusting municipal zoning laws to build more family-friendly housing.
Ben Myers, President and Owner of Bullpen Research & Consulting Inc., told Livabl that changing zoning laws in the City of Toronto to eliminate restrictions on constructing four-storey residential buildings, and making the consultation process more democratic, would help to increase supply in the city. Bringing transit to underserved areas and rethinking the development of suburbs to provide denser and more diverse housing options would also benefit supply.
“The number one thing is just allowing more density and more housing types. If we can get wood-frame, lower-density product in more areas, that’s the key,” Myers said.
“High-rise towers, concrete towers that have to go four storeys underground and take five, six years to build, they’re higher-risk developments and they’re very expensive, so we have to try and figure out how to do infill cheaply and get as many properties built as possible,” he added.