On Tuesday, Finance Minister Bill Morneau released the 2018 Federal Budget, which some believe did little to address concerns about Ontario and B.C.’s overheated housing market.
One of the biggest issues remaining for Toronto and Vancouver residents is the lack of affordable housing. There were many who expected additional initiatives to be put forward by the Liberal Government while addressing the housing crisis. Even though the topic of rental loans and a shifted focus to address supply concerns had made an appearance, it was a relatively lean budget short of any grand long term plans; undoubtedly to be averted until 2019, when the next federal election takes place.
B.C.’s Finance Minister Carole James was one of many who addressed her concerns about the 2018 budget. During a press conference earlier this week, the Finance Minister commended the government’s plan to increase loans for rental housing, however she was concerned about the lack of any long-term strategy. “Most of the money is back-end loaded.” James stated. “Affordability and housing is a crisis in our province. We recognize that. We put a 30-point plan forward. I want to see the federal government step up to the table.” B.C.’s NDP Finance Critic was another vocal opponent of the 2018 budget. “British Columbians aren’t looking for measures that only take place after the next election or in the next ten years; they’re looking for measures to address this crisis today. Unfortunately, they weren’t present in the Liberals’ budget,” lamented NDP MP, Peter Julian.
A positive step taken in the 2018 budget was the allocation of $1.25 billion (increased from $2.5 billion to $3.75 billion) over three years to increase the amount of loans available through the Canadian Mortgage and Housing Corporation’s (CMHC) Rental Construction Financing Initiative. In April 2017, the CMHC launched this initiative; which is designed to provide low-cost loans to support the construction of new rental housing. The CMHC anticipates the initiative to help alleviate pressure in rental markets that are experiencing low vacancy rates; Toronto and Vancouver markets are currently experiencing record lows. The financing for this initiative provided by the federal government is expected to add 14,000 new housing units across the country. According to the 2018 budget, “approximately 30% of Canadians rely on the rental market for housing. While patterns will vary across cities, future demand for affordable rental housing is expected to rise as the population ages, young professionals migrate to larger cities, and immigration continues to grow in our communities.”
While the 2018 budget may lack an abundance of new measures, the provinces and its regulators continue to evaluate the policies implemented at the end of 2017 and beginning of 2018. New regulations such as tougher mortgage qualifications, foreign buyers tax, and increased interest rates have all been introduced across the country in hopes of cooling the real estate market. With methods aimed at curbing demand, the federal government may be hoping it can address the imbalance without adding to the deficit further. However, the question remains – will the measures employed to date be enough to satisfy Canadian residents?