Meister Eckhart, a 13th-century German theologian and philosopher, once said, “The price of inaction is far greater than the cost of making a mistake.”
It might be wise for the federal government to heed those prophetic words in light of the current housing supply and affordability crisis facing our country.
Lack of housing supply – both new and rental – is eating up incomes, driving a new wave of homelessness, causing families to move out of major urban centres, and resulting in untold suffering.
RESCON has been calling for action for some time now.
To boost supply, we've requested that the feds provide more tax incentive programs and an exemption or rebate on HST collection on construction of residential buildings, make unused federal-owned land available for housing, and allow more foreign-trained skilled trades to come to Canada.
We've also suggested that the feds pump more money into public infrastructure that supports housing. A report authored by the Canadian Centre for Economic Analysis showed that taxes on the purchase of a new home in Ontario account for 31% of the price, and the federal government's share of those taxes is 39%, yet it only invests 7.1% in public infrastructure.
Clearly, there is much more that can be done to boost the housing stock.
A report released recently by the Place Centre at the Smart Prosperity Institute, Real Property Association of Canada, and the Canadian Alliance to End Homelessness outlines 10 rapidly actionable recommendations the feds could implement. It was the result of a roundtable of Canadian housing sector organizations and experts – both from the private and non-profit sectors.
One of the report's key recommendations calls on the feds to take on a leadership role and coordinate with provinces, territories and municipalities to ensure that more rental units are built. It also proposes waiving the GST/HST on new rental housing construction to incentivize more building.
Another suggestion is to provide low-cost, long-term, fixed-rate financing for constructing and upgrading purpose-built rental housing, and a revamp of the National Building Code to drive innovation.
Meanwhile, the report suggests financial reforms to ensure building rental units are viable by creating a tax credit for developers that invest in community rental units and deferring the capital gains tax when a project is sold and the proceeds are reinvested into the construction of more rental units.
The costs of building purpose-built rentals have increased significantly and the number of new units being built is likely to drop in the coming years.
Authors of the report have calculated that, if the recommendations are implemented, Canada would see more than two million market rental and affordable rental homes built in less than a decade.
The housing issue was in the limelight at a retreat by federal cabinet ministers recently in P.E.I. While no timeline or specific initiatives were provided for a plan to tackle the problem, Housing Minister Sean Fraser said afterwards that the situation does demand a response from the federal government.
When exactly that will happen remains uncertain. When asked if a new plan would be presented in the fall he replied, “You should expect to see something along those lines for me over the next number of months.”
Earlier, Fraser had indicated the government is open to a possible cap on the number of international students allowed into Canada each year to limit housing demands, but Prime Minister Justin Trudeau later indicated it would be wrong to single out international students as a cause for the crisis.
According to the Canada Mortgage and Housing Corporation, we need to build 5.8 million units of housing in the next 10 years to restore affordability to the housing market.
That's a tall order.
In 2022, the Ontario government set a target to build 1.5 million homes in a 10-year period. Between 1973 and 1982, 850,000 homes were built in Ontario. But in the last 10 years, less than 700,000 homes have been built. At that rate, we are well short of the pace needed to reach the target.
Interest rate hikes, increasing taxes, fees and levies, along with supply chain issues are making it difficult to spur construction of new housing. But failing to boost the housing stock is not an option.
We must dramatically increase our home-building efforts. The only way to do that is for governments of all political stripes to work together with industry on the crisis. Cooperation will be key.
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