First time home buyers will not be charged GST (5%) when buying a home, as long as the place they’re buying costs less than $1M. This means that people buying a home for the first time will save up to $50k on their purchase.
Edit: Note, GST is mostly only charged when buying newly built homes, so this won’t have any effect for people buying used homes.
Let’s imagine a world where an unapologetic socialist NDP leader stood up and said: “the market has failed to deliver homes at a price the median Canadian family can affords. So our govt will build homes across the country, employing Canadians and using Canadian products. These will not be luxury condos for the rich, but they will be functional and good, and will be made the wood and materials we used to send to America at a discount. And we will close the gap in 5 years, and deliver public monthly status reports on what we have accomplished.”
After the election, assuming Singh steps down, can we all agree to get someone who says something like that? Pretty please? Because I already got my wish with a perfect candidate to match my way of thinking, and I want you to be waiting in the wings if our way fails yet again.
What land is the government going to build all this housing on? Crown land? That’s mostly wilderness. Who wants to live out there?
Farmland? They’d have to buy it from farmers. Appropriating land from farmers is an extremely unpopular and regressive policy.
That leaves land in the city which is generally either occupied by houses or businesses already or it’s in the process of being developed but is caught up in regulatory hurdles or in various stages of construction. It’s actually a big problem that we don’t have enough skilled tradespeople to build houses at the speed we want them built.
The regulatory issues are a problem for municipal and provincial politics. The Canadian federal government doesn’t have any power to fix that stuff. The design of our federation gives most of the power to the provinces.
Let’s stop pretending these are unsolvable problems.
You’ve identified some real obstacles – a lack of tradespeople and opposition from local groups blocking. We need the federal government to work with the provinces to push them to do what we need to do, using the carrot or stick or a combination of the two.
Here’s how I would do it. Make designs for a small number of standard plans for buildings that are designed around the principles of efficient building. Across these sets of plans, you standardize building materials so that the parts can be sourced by a variety of Canadian suppliers using Canadian-sourced materials. Then work with the provinces to ensure that the homes meeting these specifications can be built anywhere it’s safe to do so – be it a quiet suburb of Vancouver who fights against any change to the “character of their neighbourhood” or a depressed town in rural Newfoundland or anywhere in between. If the provinces have conservatives who want to rely on the private sector, let the markets build em.
If the provinces are run by leftists, have the government build em. And yes, we need to train people to build. But this is where the standardization comes in – because we aren’t just building bespoke homes, we are implementing well-understood designs and can share in each others knowledge and experience as we build them. And with the economy in turmoil due to the American-led trade war, there will be people eager to be retrained.
We have the materials, we have the people, we have the money, and we have the will. What I’ve outlined is one path – and I have absolutely zero delusion that it’s the only possible path. Maybe someone smarter than me will come up with a better one, and well hey by sheer coincidence we just got a new PM who is in fact smarter than me.
The technical problems are likely the most solvable ones, except for the skilled trades shortage. That problem is very difficult to solve because most people don’t want to do the work and the people who don’t have any other options tend to have personal / mental health problems that make them very unreliable as workers.
I have several friends who work in the skilled trades (drywall taping and finishing). It’s extremely tiring work that leads to chronic joint pain later in life. You’re also exposed to large amounts of dust so you’re wearing a lot of PPE which is quite sweaty and uncomfortable. Many of the other people they encounter in the trade have severe problems with alcoholism, drug addiction, and are very unreliable as workers.
You might suggest that these trades should pay more in order to attract higher quality workers but that means the cost of building housing goes up even more! Ultimately, the problem for skilled trades is the Baumol effect. The labour productivity of construction work has not risen to match the productivity of other industries (notably the tech industry). This problem has affected many industries in our society. It’s the hidden cost we all pay for the convenience of technology.
The political problem is even more difficult to solve. The issue there is that the middle class has grown rich on the back of their home. The rise in real estate value for people’s single family houses has been the main contributor to the wealth of the middle class. Building on this, the two main political parties in Canada (Liberals and Conservatives) target the middle class as their voting base. Thus they are both extremely reluctant to do anything that would lower the demand for housing which would cause real estate prices to fall, destroying the wealth of their voting base.
Milton Friedman has called this problem “middle class welfare.” Political parties target the middle income 51% of the population with social programs and policies that benefit them, not the bottom 51% as we might expect. The most obvious of these programs is government-supported higher education (which benefits the middle class at the expense of the working class), but that’s another discussion entirely.
I believe that the Liberal government’s pursuit of aggressive immigration policies was done deliberately to increase demand for housing (making the middle class rich) and to provide more working class taxpayers to support the education of the middle class.
That’s exactly what I want. And I also want tax changes that stop homes from being a investment vehicles. That’s part of what has run prices up, in addition to the stuff we both listed above.