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During the Canadian federal election 2019, held on October 21, the Liberal Party of Canada won a minority government, led by Prime Minister Justin Trudeau. What do the results mean for the country’s real estate industry?
While the new Parliament will not convene until December 5, here is what we might expect to see with regards to the Canadian housing market, based on the pre-election platform.
First-Time Home Buyer Incentive
The First-Time Home Buyer Incentive (FTHBI) launched in September of 2019, and Prime Minister Trudeau pledged to continue the incentive during the election campaign.
In addition to the continuation, the Liberal party also campaigned to expand the FTHBI for people in Victoria, the Greater Vancouver Area, and the Greater Toronto Area. Under this expansion, the value of a qualifying home would go from approximately $500,000 to nearly $800,000.
“We took a big step in the right direction [launching FTHBI], but we know a lot of people are still struggling, especially in places like Victoria or Vancouver where the cost of housing has skyrocketed due in part to housing speculation by foreign owners,” Prime Minister Trudeau said in a press conference.
In its post-election analysis, Mortgage Professionals Canada commented on the FTHBI expansion.
“The promised increases to the FTHBI in the GTA, GVA and Victoria would be welcomed but may not be immediately forthcoming,” Mortgage Professionals Canada wrote.
“We expect there will be further internal dialogue between the Ministry of Finance, CMHC, Bank of Canada and OSFI before this promise is implemented, either as presented or with modifications.”
National Housing Tax
The federal Liberal party also campaigned on a platform to add a 1% annual tax on residential properties owned by those who are not Canadian and who do not live in Canada, on top of local taxes already in place.
Canadians living abroad or permanent residents in Canada would not be affected in any way, Prime Minister Trudeau said.
“We want our markets to stay stable and affordable,” he stated.
Mortgage Professionals Canada speculated this could come into effect in spring 2020.
“We do believe the Liberals will implement their national tax on vacant residential properties owned by non-Canadians who don’t live in Canada, likely in the spring budget,” they wrote.
Sustainability and Climate Change
The Liberal Party of Canada housing platform focused heavily on cutting home energy bills and pollution, making several pledges, including:
They also pledged to help Canadians deal with climate-related risks, particularly flooding.
As for other housing-related policies, such as the mortgage stress test and amortization, no platform pledges were made by the Liberal party to change it.
“It doesn’t appear we will see any of the changes to the stress test or amortization hoped for by many,” Angela Calla, of DLC Canada Inc., wrote in post-election analysis.
“Our initial expectation is that mortgage rules and related policy will not be a top priority for Justin Trudeau’s 156-seat minority government,” Mortgage Professionals Canada stated.
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