The federal government cannot solve Canada’s housing affordability problems with policies, according to the majority of respondents to a nationwide survey, released March 14.
More than half (55 per cent) of those surveyed by real estate website Zoocasa agreed that “housing affordability in Canada cannot be fixed with government policy measures alone” and only one in five (21 per cent) said they felt “confident that the government can improve housing affordability in Canada within the next five years.”
A huge majority of respondents (82 per cent) agreed that housing affordability is a major issue that has negatively affected Canadians.
More than 1,000 homeowners and renters across Canada were surveyed March 1-11, ahead of the upcoming Federal Budget, which will be released Tuesday March 19. Canadians were asked about possible housing policy measures that could be implemented and whether such policies would improve affordability.
The recent housing market slowdown in Canada’s major cities has been largely blamed on the federal mortgage stress test, which reduces buyers’ purchasing power by up to 20 per cent by increasing the interest rate at which mortgage applicants have to qualify. However, only 57 per cent of the Zoocasa survey respondents said they were aware of the stress test. Of those, exactly half said they believed it had reduced housing affordability for Canadians.
Overall, just 15 per cent of those polled agreed that reducing the qualifying rate of the stress test would be the most helpful policy change to improve affordability – in contrast with repeated calls from the real estate and construction industries to do so.
The most popular potential measure among respondents was increasing the First-Time Home Buyers’ Tax Credit amount, which is currently a one-time credit of $750 in the year of purchasing a home. Twenty-eight per cent (30 per cent of renters and 26 per cent of homeowners) said they believe expanding this to a larger amount would be the most helpful policy in improving affordability.
This was followed by:
- 15 per cent of respondents: Reduce the mortgage stress test rate (17 per cent of renters, 15 per cent of homeowners agreed this would be the most helpful);
- 10 per cent: Increase the maximum mortgage amortization period to 30 years, which would reduce monthly payments by spreading them out over a longer period (6 per cent of renters and 13 per cent of homeowners agreed); and
- 8 per cent: Expand the Home Buyers’ Plan, which allows buyers to withdraw up to $25,000 from their RRSP to buy a home (8 per cent of renters and 8% of homeowners agreed).
Federal finance minister Bill Morneau has hinted there will be an announcement on housing affordability at next week's budget, which will be covered on this website.