“What’s in the policy for Canadians trying to buy their first homes in high-priced markets like Toronto and Vancouver? Very little,” Jane Londerville of the University of Guelph wrote in an analysis for The Canadian Press.
This is the federal level’s abdication of its responsibility to use the instruments in its disposal to make home ownership more accessible in red-hot markets, Londerville stated.
“The provinces and local governments have control over many factors that affect affordability. But it’s wrong to assume that there’s no federal role in ensuring affordable and responsible home ownership,” the academic argued. “The federal government can affect the ability to buy a home through mortgage insurance, financial regulation, interest rates and tax policy.”
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And while the strategy had its strong points such as a new portable housing benefit that would be of great help to those in unstable housing situations, “Ottawa should also put any new or pending changes to mortgage and financing rules on hold, including the January 2018 change requiring stress-testing of uninsured mortgage loans at approximately two per cent above the rate negotiated by the borrower.”
This is to accommodate other potential federal-level solutions, as “there needs to be a recognition that affordable housing and housing affordability are different and require different policy responses.”
“Now that the government has announced a comprehensive plan for assisting the affordable housing segment of the housing market, it’s time to turn its attention to helping people buy homes.”
For instance, the government could consider revisiting current tax policies that concern home ownership.
“One option would be a means-tested tax credit to defray the costs associated with a home purchase. Another option would be to allow prospective home owners to contribute to a Tax Free Savings Account with means-tested matching contributions from the government for the purpose of saving up for a larger down payment,” Londerville suggested.
While the release of the National Housing Strategy represented the first fully detailed roadmap for the federal government’s efforts to address the real estate market’s long-running concerns over affordability, a real estate professor pointed at one major hitch in this strategy.