Although the most recent Federal budget announcements were mostly met with approval by housing industry analysts, there were concerns that some calls to make housing more affordable were not heeded by Flaherty.
Image: Hugh Lee / Flickr
For instance, while the budget retained the first time homebuyers tax credit and the new ceiling on the amount homebuyers can pull from their RRSPs to put into their down payment on a home, they did not extend the home reno tax credit.
Clearly, some of this is due to concerns that Canada may experience a housing bubble in the near future, and that providing any more impetus to its growth may be harmful. Flaherty felt there was no need for further stimulus because the market for homes is “healthy and stable.”
But industry groups do feel that some changes are needed to improve housing affordability. For instance, when the GST was first rolled out, it allowed new homeowners to rebate their full GST costs for any homes under $350,000. However, that was in 1991. Due to inflation, a home that cost $350,000 would be worth upwards of $550,000 today, and so the number of people that can claim this rebate is falling every year.
The Canadian Real Estate Association (CREA) is also asking for the first-time home buyers tax credit to be boosted, and that the credit be indexed to inflation so that the problem with the GST credit doesn’t happen to this credit.
These same groups are happy that the government is not putting any further regulations on the market. The chief economist of the CREA, Gregory Klump says that, “We’re satisfied that no further regulatory action needs to be taken.” He characterizes the current condition of the market – which some feel is too hot – as the activity that occurs in a period of economic recovery. He also expects it too cool later in the year when interest rates start to rise.
Although the budget did not have a lot of positive news for home buyers, perhaps no news is the best news: home buyers don’t need a new HST, for instance. And the first-time home buyers credit is one of the best ideas that the government has come out with in a while. From a real estate perspective, then, this budget was probably the best we could reasonably hope for.
Heleen Jacobsen
Broker of Record with InfoMarket Group GMAC Real Estate
www.infomarketgroup.com
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