Hands-off approach gets praise
But federal budget missing relief for GST on homes
The federal budget’s impact on the housing industry has less to do with any changes than with what was left untouched, says a Calgary builder.
Finance Minister Jim Flaherty deserves praise for not revising mortgages, homeowner lines of credit, or amortization and down payment rules in the recent budget, says Graham Boyce, president of Jayman Masterbuilt.
“I think resisting dealing with that and letting the market proceed was a very big thing,” says Boyce.
During the past few years, the federal government has toughened its mortgage rules in the wake of the worldwide recession, which was partly caused by the meltdown of the U.S. housing market due to lax credit.
There had recently been talk of potentially dropping amortization in Canada from 30 years to 25, as well as boosting the minimum down payment to seven-anda-half per cent, up from five per cent.
Such changes would have had a negative impact on housing affordability, barring some potential buyers from the market, says Boyce. “That would have made quite a difference to qualifying here in the Alberta market,” he says.
On a Canada-wide level, this “type of intervention would have prevented thousands of first-time buyers pursuing their dream of home ownership,” says Ron Olson, president of the national CHBA, in a new release. “Market stability is essential and more regulation could threaten every Canadian who owns a home.”
The budget also outlines reforms of Canada’s immigration system to make it faster and more efficient to bring in skilled labour needed for industries such as housing construction, says Boyce.
“If the economy does pick up, we don’t want to get back in a scenario like we had in 2006 and 2007 with a huge shortage of labour,” he says.
“I think helping keep it on a better keel is a good thing.”
While Olson is pleased the federal budget tackles the issue, Olson is concerned about how homebuyers are being taxed.
He wants to see the federal government change its application of the GST to new homes.
“The GST treatment of new homes and home renovations is long overdue and must be addressed,” says Olson.
He would also like to see the federal government implement a permanent 2.5 per cent home renovation tax rebate to help protect housing affordability.