Housing affordability crisis: Will the feds' 2023 budget improve things?

Experts weigh in on possible impact of new government proposals

Housing affordability crisis: Will the feds' 2023 budget improve things?

While Budget 2023’s proposed code of conduct for mortgages and its promised boost for the pace of housing construction would help improve Canadian housing market conditions, the economic plan still lacked some vital measures in improving housing affordability measures, according to market observers.

For Doug Porter, chief economist at BMO Capital Markets, housing appeared to be “very much an afterthought” in Budget 2023.

“It almost didn’t get a mention and really no significant measures,” Porter told The Canadian Press. “It’s almost like the focus moved on this year.”

Only the additional $4 billion earmarked for the Urban, Rural, and Northern Indigenous Housing Strategy was worthy of note, Porter said. He added that the federal budget for this year was alarmingly silent on the issue of affordability, which he said “hasn’t really improved over the past year.”

Data from the Canadian Real Estate Association showed that on a seasonally-adjusted basis, the national average home price went up by 1.7% from January to February, reaching $634,830.

Cailey Heaps, a Toronto-based broker, told CP that the mortgage code of conduct outlined in Budget 2023 would be valuable in the hottest markets as it will give mortgage lenders room to formulate their own solutions, “hopefully allowing more Canadians to maintain ownership and investment in their homes… In today’s market, the reality is that if Canadians’ lose their homes it could be another generation before they get back into housing, which would be devastating.”

However, Heaps said that higher taxes on corporate investors could well end up being a misguided attempt at addressing the affordability crisis.

“There is a widely held perception that corporate investors are damaging to affordable housing, but the federal government isn’t meaningfully investing in rentals, so someone has to step up and solve the issue,” Heaps said.

“If corporate investors can help by creating more housing, we should lean in and allow them to solve where the government cannot… It is also reasonable, if they are profiting, to ask them to contribute by further increasing density for the missing middle.”