The program should also operate in line with other policy tools, finance minister says
The uptake of the First Home Savings Account (FHSA) launched earlier this year has significantly exceeded expectations, according to federal finance minister Chrystia Freeland.
At the same time, Freeland noted that the FHSA – which is designed to help Canadians in the 18-40 age range save up for the down payment on their first homes through a deposit of $8,000 annually, with a lifetime contribution of $40,000 – should operate in concert with other policy tools to help more and more Canadians enter into home ownership.
“It is not going to solve all of their problems, I am not claiming that, but it’s a little bit of help,” Freeland said after a meeting with constituents in Toronto earlier this week.
Royal Bank of Canada, which was among the first to launch the program in April, said that clients have already opened “tens of thousands” of accounts to date. The bank estimated that over a quarter of these accounts have already reached the maximum annual amount.
“What [home buyers] really were saying is this is a crisis, and this is an intergenerational crisis, and I really recognize that,” Freeland said. “I really believe that it is important for us at the federal level, the provincial level, the municipal level, to put forward all the tools we can to resolve this crisis.”
Contrary to Prime Minister Justin Trudeau's recent statements, academics argue that housing remains a direct federal responsibility. https://t.co/n4mDyZlPqU#mortgagenews #mortgageindustry #housingmarket #housingpolicy— Canadian Mortgage Professional Magazine (@CMPmagazine) August 10, 2023
Housing supply challenges linger
Freeland acknowledged that while the Liberal administration is “laser-focused” on solving supply challenges, more needs to be done to ensure a faster pace of home building and address the country’s long-running affordability issues.
Canada Mortgage and Housing Corporation (CMHC) has estimated that an additional 3.5 million new units need to be built across Canada by 2030 just to bring prices back to manageable levels.
“Two-thirds of the 3.5 million housing unit gap are in Ontario and British Columbia,” CMHC said earlier this year. “These two provinces have housing markets that are not affordable, and they have faced large declines in affordability.”
Only Alberta is on track to achieve its affordable housing supply target by 2030, CMHC warned.