Look for measures to make housing more affordable in federal budget

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Look for measures to make housing in Canada more affordable in the federal budget next month, says CIBC economist Benjamin Tal.

Canada’s housing affordability crisis is expected to be one of the main focuses of the budget when it is tabled on April 16 and Canadians can expect more affordability measures, said Tal, deputy chief economist at CIBC Capital Markets.

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“The government realizes that housing is a major issue and the next elections will be all about housing,” he said in a recent interview with the Financial Post’s Larysa Harapyn.

A boost for first-time homebuyers is at the top of the wish list for Canadian homebuilders.

Ottawa has determined that Canada must build 5.8 million homes over the next decade to meet housing needs, which means doubling housing starts at a time when construction is slowing, said Kevin Lee, chief executive of the Canadian Home Builders’ Association (CBHA).

The CBHA’s housing market index, which reflects industry sentiment, fell to a record low in the fourth quarter of 2023.

The CBHA recommends the government bring back 30-year amortization on insured mortgages for first-time buyers of new homes to help them overcome financial obstacles and spur more home building.

“Helping first-time homebuyers with changes to 30-year [amortizations] would be the type of thing we need to really change the equation,” he told Harapyn in an interview.

Lee said measures to reduce barriers for builders and scrapping the GST on purpose-built rentals were “steps in the right direction,” but mostly apply to the long-term outlook.

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Nor will interest rate cuts expected this year be enough to turn the tide on the country’s housing supply.

“We need to continue to see holistic change on the policy front,” Lee said.

Builders also hope the federal budget offers assistance with bolstering the construction industry’s labour force, with 20 per cent of its workers set to retire within the coming decade.

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“We have a very tight labour market and we need some support there,” he said.

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