This week, the federal government’s mid-year statement included housing costs. CIBC Economics reports that softer growth, higher interest rates and initiatives announced since the budget mean the updated deficit numbers aren’t as favourable in terms of fiscal balances as was anticipated. That said, they’re still much better than what we’re seeing in the US: in each of the next few years, Canadian federal deficits are expected to be less than 1.5 per cent of GDP.
Housing issues: $15 billion loan program + other steps
The Canadian government is focused on new steps to address housing challenges and increase rental housing supply, with rent inflation one of the worst culprits of overall inflation in the country.
In terms of what these steps and initiatives are, there’s a wide variety.
The biggest is adding $15 billion in loans under a program that finances rental housing developers beginning in 2025-2026. Another $1 billion was added to a fund that supports affordable housing, also starting in the same period. Earlier, the government also announced removal of GST on purpose-built rental housing, and that it would boost CMHC insurance activity around rental apartments.
CIBC points out that while these steps are significant, it will take time for the additional supply to be built and slow rent inflation.
In addition, to help reduce rent inflation, the forbidding of deducting tax on expenses for units used for short-term rentals within jurisdictions with restrictions against them. This will help encourage owners to rent these units to long-term tenants.
OREA applauds for taking action
In a release, the Ontario Real Estate Association (OREA)’s CEO, Tim Hudak, shares his take: “The Government of Canada’s housing-focused Fall Economic Statement is a clear indication the federal government is taking this issue seriously, and OREA commends Housing Minister Sean Fraser and the Trudeau Government for continuing to take action.
Ontario realtors are pleased to see several pro-housing, pro-supply measures on the table today, including a commitment of $15-billion in low-cost loans for new purpose-built rentals and $1-billion dedicated to new non-profit housing. As interest rates have increased over the past year, financing has become increasingly expensive – so programs such as this can help get rental housing construction underway.”
Hudak mentions that “Canada needs more skilled tradespeople, and OREA applauds the Federal government for their commitment to work with the provinces and territories on implementing full interprovincial mobility for construction workers.”
He also notes that realtors have advocated for reforms to the mortgage stress test and that OREA is “… thrilled to see this stringent requirement removed as part of the new ‘Canadian Mortgage Charter’. Homeowners will now have greater flexibility and choice when renewing their mortgages, particularly at a time when households are already feeling financial squeeze.”
Read CIBC Economics’ report here.
