Standing on a parcel of land that most young families in Victoria likely could not afford to purchase, Liberal Leader Justin Trudeau announced two measures directly aimed at helping to address out-of-reach home prices in Canada’s biggest cities.
A re-elected Liberal government would impose a national 1% tax on properties owned by non-Canadians and non-residents in an effort to curb foreign speculation in real estate, Trudeau pledged Thursday at campaign stop in Victoria, B.C.
The tax would help deter foreigners who wish to speculate in the housing market, which has been a key contributor to a surge in home prices in some markets in recent years. The changes would help ease affordability concerns that affect first-time home buyers, the Liberals say.
“We know a lot of people are still struggling, especially in places like Victoria or Vancouver, where the cost of housing has skyrocketed due to housing speculation by foreign owners,” Trudeau said.
“We’re also sending a message that Canada is not a place for those who wish to speculate in the housing market,” he added.
Trudeau is also promising to expand a program first announced in last spring’s federal budget to help first-time home buyers lower their monthly payments through a shared-equity mortgage with the Canada Mortgage and Housing Corporation.
A Liberal government would increase the maximum-qualifying price of a home for applicants to this program in the high-priced housing markets of Victoria, Vancouver and the Toronto region. The enhanced program would come into force as of November and proposes to increase the value of a qualifying home in those areas to nearly $800,000, up from approximately $500,000.
It’s one step in the right direction that could help young families’ needs to keep them from leaving places like Victoria, said Edward Geric, a developer in Victoria who was on hand for the announcement.
“The demand has just been incredible over the last number of years which has obviously pushed pricing up in the area,” he said. “A lot of families and their young kids are having to move up-island or away from the city, and that’s not community. So the parents and grandparents who have had their places for years are still here, but now the younger generations are being forced elsewhere.”
But Realtors and mortgage brokers say the stress test for qualifying for mortgages is also too stringent and needs to be addressed.
Real estate associations representing nearly three-quarters of the Realtors in Canada are calling on all federal parties to commit to easing mortgage rules. They say too much regulation is also a big part of what is making homeownership unaffordable across the country, while the CEO of the Canada Mortgage and Housing Corp. has urged the federal government to keep the rules in place to protect the economy from tragic consequences as debt levels soar.
Copyright © 2019 The Associated Press, Teresa Wright. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. With files from Jody White in Toronto.