OTTAWA, March 19, 2019 /CNW/ - The Canadian Home Builders' Association (CHBA) is hopeful that measures announced by the Minister of Finance in today's federal budget will help ease Canada's growing housing affordability crisis.
The budget includes a new First-Time Home Buyer Incentive, increases to the Home Buyers' Plan, expansion of the Rental Construction Financing Initiative, and measures seeking to address the housing supply shortage—all items in line with CHBA recommendations. It also makes reference to monitoring the effects of the stress test and adjusting it if economic conditions warrant, again a key concern of CHBA members.
"The new First-Time Home Buyer Incentive, which introduces shared equity mortgages for qualified first-time buyers, will make a difference if it meets the estimates government officials are suggesting: helping 100,000 Canadians achieve home ownership in the next three years. That impact would be similar to what CHBA's proposed reintroduction of 30-year insured mortgages for first-time home buyers would achieve," said CHBA CEO Kevin Lee. "This incentive cannot come soon enough, as many markets are very challenged right now. We hope the government will move very quickly to make it a reality," he added.
CHBA has recommended the shared appreciation mortgage approach for some time as a very good tool for helping those who can't get into homeownership but have the means to pay rent. This new initiative in the budget to extend such a program to essentially all first-time homebuyers seeking entry-level housing takes the concept to a much broader level. CHBA will continue its work with the Government on how to make such a program most impactful.
CHBA continues to recommend that modifications be made to the current mortgage stress test, which has served to lock out too many well-qualified Canadians. CHBA has advised that with the market and interest rate changes of the past year, it is time to adjust the stress test accordingly. The budget notes that the government would adjust the stress test if economic conditions warrant, to support access to housing while safeguarding financial stability.
"The First-Time Home Buyer Incentive, if coupled with immediate adjustments to the stress test, has the potential for getting the housing continuum functioning again. It is essential that these changes come quickly though," stated Lee. "Current restrictions on mortgage access mean that many millennials and new Canadians are seeing homeownership slipping away, and in many markets the economic impacts are substantial."
"Increased limits for the Home Buyers' Plan that will allow up to $35,000 of RRSP savings to be put toward the purchase of a first home are also welcome, but should be coupled with changes to the stress test," Lee noted.
CHBA recently surveyed its members across Canada and found that the number of first-time home buyers fell by one-third between 2017 and 2018, and 95% of members who responded reported that the stress test was the number one issue affecting buyers and sales. "Decreasing affordability has widespread impacts," noted Lee. "The knock-on effects of no first-time buyers mean move up buyers, who are also affected by the stress test, can't vacate their entry-level housing to secure their next home. Further knock-on effects include tighter rental markets and higher rents, as well as more commuter traffic as first-time buyers look further afield in search of an affordable home."
Since the introduction of the stress test in January 2018, CHBA estimates that some 147,000 potential home buyers have been locked out of the market.
CHBA has been urging the federal government to take meaningful action on housing affordability for some time, most recently at its annual Day on the Hill.
Looking ahead to the 2019 federal election, CHBA will be encouraging all federal parties to address housing affordability in very meaningful ways in their respective platform documents.
About the Canadian Home Builders' Association
The Canadian Home Builders' Association (CHBA) is the voice of the residential construction industry in Canada, representing some 9,000 member firms across the country. Our membership spans new home builders, renovators, developers, trade contractors, building material manufacturers and suppliers, lenders, and other professionals in the housing sector.
SOURCE Canadian Home Builders' Association
For further information: MEDIA INQUIRIES : Journalists wishing to interview Kevin Lee, Chief Executive Officer of the Canadian Home Builders' Association, are encouraged to submit their request by email or telephone to: David Granovsky, Director, Government Relations, (613)-230-3060, ext. 241, (613) 617-3657, [email protected]