The step is just the first in a set of housing-focused measures that authorities will be introducing, Trudeau says
Prime Minister Justin Trudeau has announced that the federal government would remove the goods and services tax (GST) from the construction of new rental apartments to help accelerate the development of fresh housing supply.
The move, which has previously been widely recommended by market observers, came amid growing criticism of the Liberal administration’s seeming incapacity to address the housing affordability crisis.
“The federal government should listen to other levels of government to improve the targeting of transfers and minimize the frictions that are preventing more homes from being built,” Desjardins said recently. “It should consider other tax incentives as well, such as foregoing the GST/HST on purpose‑built rental construction.”
Trudeau said that this was just the first in a set of housing-focused measures that the federal government will be introducing, CBC reported.
Municipalities which are planning to access the federal housing accelerator fund will now be required to revoke or alter unreasonably restrictive zoning policies.
Trudeau also called on market players to devise effective plans to stabilize grocery prices in the “near-term”, with the prime minister warning of government-imposed solutions if grocers do not supply these plans by Thanksgiving.
Housing starts in Canada dropped 10% in July compared to June, indicating ongoing supply challenges in the housing market.— Canadian Mortgage Professional Magazine (@CMPmagazine) August 16, 2023
Read the full report here: https://t.co/aDq2NaIODn#breakingnews #housingstarts #mortgageindustry #housingmarket #realestate
Robust population growth inflaming rental market scarcity
With higher-than-anticipated population growth spurring accelerated demand, the Canadian rental segment is finding itself constantly bereft of supply as newcomers continue to snap up homes almost as soon as these units enter the market.
Aled ab Iorwerth, deputy chief economist at Canada Mortgage and Housing Corporation (CMHC), has warned that elevated interest rates are adding fuel to the fire, since higher mortgage costs are forcing more Canadians to stay in the rental market longer and increasingly compete with newcomers to the country.
“We have concerns that the higher interest rates will lead to a fairly uniform decline in new construction of rentals,” the CMHC deputy chief economist said recently.
However, Housing Minister Sean Fraser said that any attempts to adjust Ottawa’s ambitious immigration targets will have to go through the other levels of government and through the institutions that have “a duty to play part of a role in housing the people who come here.”
“When we look to the future of immigration levels planning, we want to maintain ambition and immigration, but we want to better align our immigration policies with the absorptive capacity of communities that includes housing, that includes health care, that includes infrastructure,” Fraser said in an interview with CTV.
“It's important that when we’re looking at the answer to our housing challenges, we also focus on what we can do to increase the supply.”
The federal government will be ramping up its target of new arrivals to 500,000 annually by 2025.