“Throughout 2016, the most common discussions related to the GTA housing market can be traced back to ownership housing affordability, the record pace of home sales, and double-digit annual rates of price growth,” the Toronto Real Estate Board said in its Market Year in Review, released Tuesday. “Notwithstanding record low levels in the supply of homes for sale, public policymakers focused firmly on the demand for ownership housing in the City of Toronto and surrounding regions.
“An example of this type of policy solution in practice can be found at the federal level with respect to recent changes in mortgage lending guidelines.”
Last February, the federal government hiked the minimum required for insured mortgages on houses costing more than $500,000 to 10%.
In November, the government stipulated buyers purchasing with less than 20% must qualify at the benchmark interest rate, as opposed to the contracted rate.
These two policy changes don’t address the supply issue, which impacts affordability in Toronto, according to TREB.
The association argues affordability can be addressed in the following ways.
“Acknowledge that the lack of a diverse supply of ownership and rental home types is at the root of the strong rates of price growth and declining affordability experienced since the recession and most certainly over the past two years,” TREB said. “Different levels of government, in conjunction with industry groups, must work towards innovative solutions to prompt an increase in the supply of market-based ownership and rental housing.”
In the report, TREB argues improved transit can address affordability by lowering the cost of commuting.
“At the level of individuals who change their commute to work from a car to taking the GO Train, the affordability benefits are significant,” TREB said. “It’s not surprising then, that individuals who live in areas with less developed transportation infrastructure could see the most significant improvements in affordability (by shifting from driving to taking the GO Train), whereas those who are already largely served by better transit alternatives would see much smaller improvements in affordability.”
Another way to address affordability, according to the study, is to address the barriers currently in place that hinder supply growth.
“Across the GTA governments must streamline the planning approval process and remove red tape, pre-designate and pre-zone land, and approve all outstanding environmental assessments that relate to critical infrastructure,” Bryan Tuckey, president and CEO of the Building Industry and Land Development Association, said in the report. “As well, they need to update zoning bylaws to support intensification policies and support these policies with public education.”
to read the report in its entirety.
Home prices continue to be a hot topic in Canada’s hotter housing markets, especially Toronto. TREB weighs in on how affordability may be addressed