
Residential builders across Canada are pushing for an extension to the amortization period for insured mortgages on new homes, aiming to provide a much-needed boost to the country's construction industry. The Canadian Home Builders' Association (CHBA) is leading this charge, advocating for an additional five years in the mortgage period, increasing it to a 30-year term.
The primary objective of this proposal is to enhance affordability and stimulate increased construction activity. Kevin Lee, the CEO of the association, emphasized the potential positive impact on the housing market, stating that an extended mortgage period would attract more first-time homebuyers. In turn, this surge in demand would incentivize developers to undertake more construction projects, addressing the persistent housing shortage.
During a recent news conference, Lee highlighted the current dilemma faced by Canadians regarding homeownership. He noted that while the desire to own homes is strong among the population, financial constraints and limited access to suitable mortgages hinder many from realizing this dream. Lee emphasized the crucial link between people's ability to purchase homes and the builders' ability to construct them.
This proposal is part of a comprehensive set of recommendations presented by the CHBA in a recently released report. The report aims to guide policymakers in implementing measures that would facilitate increased home construction. Among these recommendations, the association suggests the establishment of an investment tax credit to support productivity growth in the sector.
However, not everyone is convinced that extending the mortgage period is the most effective solution. Housing expert Mike Moffatt expressed reservations, acknowledging that while the proposal might not be harmful, it might not be particularly helpful either. He cautioned that focusing solely on mortgage terms could boost demand without addressing the root causes of the housing shortage.
The Canadian Mortgage and Housing Corp. estimates that Canada needs to build 5.8 million homes by 2030 to restore housing affordability. The housing shortage has worsened due to robust population growth, placing increased pressure on the government to address the affordability crisis.
The Liberal government, currently under scrutiny for housing affordability issues, is exploring various strategies to tackle the housing shortage. Housing Minister Sean Fraser has acknowledged the need for innovation in the construction sector and is promoting modular homebuilding as a potential solution. The government aims to expedite construction by introducing pre-approved home designs and encouraging the use of factory-built homes.
The CHBA is also advocating for a refundable tax credit, equivalent to 30 percent of the investment in machinery and equipment, to further support the industry's growth. This strategy aligns with the government's approach to boost the development of the green economy, suggesting that a similar tactic could be beneficial in scaling up homebuilding efforts.
As the federal government works on a housing plan expected to be unveiled in the coming months, the industry eagerly anticipates measures that will build upon existing policies. These policies include the elimination of Goods and Services Tax (GST) charges on new developments, demonstrating a commitment to addressing the pressing issues in Canada's housing market.
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