Federal Housing Plan sets the stage for comprehensive approach to address housing affordability and supply
April 12, 2024 – OTTAWA, ON – The Canadian Home Builders’ Association (CHBA) applauds the release of the Federal Housing Plan today. The current housing crisis is not a sudden development –it stems from many years of problematic policy at all three levels of government in Canada – and CHBA has been advocating for years for a comprehensive plan at the federal, provincial and municipal level to address housing affordability and housing supply. Housing is a complex issue that a single “solution” will not fix, and so this type of housing plan, which looks to address the many challenges that have compounded and resulted in Canada’s housing crisis, is exactly what CHBA has been calling for. CHBA is pleased that many of its recommendations on the federal role in unlocking the door to homeownership are reflected in the Plan. CHBA looks forward to further engaging with government to refine the Plan as its actions come to fruition.
While the federal Plan is putting forward its own actions, it is calling on the provinces and municipalities to do their part to prioritize housing supply and affordability too. The Federal Housing Plan calls for a ‘Team Canada’ approach – it is critical that the federal government continue to take action, but that provinces and municipalities take substantive action as well.
First and foremost in the Plan, the federal government’s decision yesterday to provide 30-year amortization periods for insured mortgages for first-time buyers will help enable young and new Canadians to attain the dream of homeownership, which in turn will drive the substantial increase in housing production that is needed to address the housing supply gap.
“CHBA has prioritized a return to 30-year amortization periods for first-time buyers for insured mortgages in its recommendations, as tight mortgage rules have been a major driver in falling homeownership rates. This measure is a game-changer for those who have been struggling with housing affordability and growing inequities in mortgage access,” stated CHBA CEO Kevin Lee. “This measure will avoid price escalation in the existing housing market while going a long way to enable our sector to respond to the government’s goal of getting 5.8 million new homes built over the next decade. It will allow more first-time buyers to enter the market and create the necessary conditions for increased housing starts because, quite simply, if buyers cannot get a mortgage to buy a home, then builders cannot build.”
Among many other positive measures in the Plan is additional federal infrastructure and transit funding and financing – essential for new home construction – tied to housing outcomes, which CHBA has long called for. Conditions to support the broad adoption of more gentle density, actions to support public transit and development of nearby higher-density housing, and a three-year freeze on increasing development taxes are all important steps. Rising development taxes have been an under-recognized major driver of increasing housing costs in new construction, which have also resulted in much higher prices in resale homes, and action is desperately needed to reverse those outcomes. Actions to support and incent the streamlining of approval processes, through the Housing Accelerator Fund, are also welcome.
CHBA commends the Plan’s intention to develop an Industrial Strategy for Homebuilding. CHBA’s Sector Transition Strategy outlined how this can unfold and why this type of strategy is necessary to increase productivity and enable a fundamental shift in how most homes in the country are currently built. CHBA welcomes the first steps: $50 million to launch a Home Building Technology Innovation Fund with the goal of helping the private sector scale up and commercialize building techniques, including for modular and prefabricated homes and low-cost financing for factory-built homes. CHBA has additional recommendations in its own comprehensive Strategy to support and accelerate this transition, and looks forward to working with government on approaches to increase productivity to enable more houses to be built faster.
The government’s Plan also importantly looks to help address the labour shortage in the sector. CHBA underscores the importance of welcoming skilled immigrants to Canada that can best support the building of more houses quickly.
CHBA also commends the intention to make changes to the National Building Code to build homes smarter, faster and at prices Canadians can afford. CHBA has long called for housing affordability to be a core objective of the building code, which, through increased stringency without cost-effective solutions, has been driving up the cost of housing for years. To that end, CHBA also cautions that efforts to drive more climate-change mitigation and adaption measures into the code, if not done strategically, will continue to drive up the cost of construction. Smart approaches will be required to find cost-effective solutions to these, and other measures being considered or already being integrated into the code – looking at code changes through an affordability lens will be essential.
There are a variety of other measures in the Plan that are aimed at reducing costs of construction, including financing measures. All measures to reduce costs are important, as those cost reductions, just as is the case with cost increases, are passed directly through to the consumer. In simple terms, higher construction costs, financing costs and taxes mean more expensive housing; lowering them means less expensive housing for both home buyers and renters.
Through these announcements, the government has recognized that a comprehensive approach is needed to address Canada’s housing affordability crisis. CHBA looks forward to continued work with the government to help unlock the door to homeownership.
Kat Reno is a member of the CHBA
