Real estate and economics experts have been reacting to Ottawa’s newly announced plan to stabilize the housing market and address concerns over rising household debt.
The measures, announced Monday by finance minister Bill Morneau include tighter lending conditions for mortgages and confining relief on capital gains tax to Canadian residents.
“We don’t expect that these measures are likely to have a significant impact on traditional homebuyers, including first-time buyers,” said Kevin Lee, CEO of the Canadian Home Builders’ Association.
He said that the measures announced by the government are fairly consistent with CHBA’s “advocacy on protecting first-time buyers from undue mortgage restrictions” and that, although details are still emerging, it appears that the plan is designed to support stability and predictability in the housing market.
The Urban Development Institute’s CEO and president Ann McMullin said that taxation is not the key to more affordable housing and urged all levels of government to increasing supply.
“If governments truly want to see affordable homes in our communities, they need to make it easier for developers to build housing,” she said, highlighting that demand-side measures will curb job creation in the construction sector.
Meanwhile, the measures will have a “modest impact” on the real estate markets due to their incremental introduction according to Craig Alexander, chief economist at the Conference Board of Canada.
On the issue of tighter lending restrictions for mortgages, which will apply to all insured mortgages from Oct. 17, Alexander says that the number of Canadians who will no longer qualify will be “extremely small.”
He says that proposed measures to reduce risk to the government for insured mortgages could increase borrowing costs but that this element of the plan is only at a consultation stage.