Canada does not have enough housing for incoming immigrants
Thanks to new government programs, there will be more real estate, and buying it will be more profitable.
Real estate has been a problem in Canada for a long time. Over the past two years, housing prices have risen by more than 50 percent. The rise in prices has become one of the main political issues in the country, and there is a serious debate as to whether it is caused more by a lack of supply in the real estate market, by high levels of immigration, by investor activity or by low interest rates.
The situation is causing more and more young families to refuse to buy their own homes. This is a serious problem for the incumbent Liberal government, as political rivals are taking notice, and this is the second election in a row in which the party has been outnumbered.
Rising housing prices may also hamper immigration, although so far the pace looks very optimistic. Last year, the country welcomed the highest number of immigrants in history, over 405,000, and this year it plans to welcome over 431,000 residents.
In addition, the government has promised to accept an unlimited number of Ukrainians fleeing the military conflict between Russia and Ukraine and arriving in Canada under a simplified entry permit (CUAET). In the first two weeks of CUAET alone, more than 112,000 applications were submitted. The program allows Ukrainian citizens to stay in the country for three years and provides a work permit.
But with inflation in Canada already at 6.7% and housing becoming increasingly unaffordable, the government is concerned that the lack of real estate could slow economic development and discourage potential immigrants.
That's why Canadian Housing Minister Ahmed Hussen has set a challenging goal for the country: to double the rate of new housing construction in the next 10 years. According to him, investment in this sector will pay off in terms of attracting and retaining immigrants.
The strategies by which the goal will be achieved are described in budget 2022. They include large investments in construction, a tax on profits from the sale of real estate that has been owned for less than a year, a ban on the purchase of residential property by foreign investors and more.
A number of policies are designed to help Canadians purchase housing:
- creating a tax-free savings account to buy your first property, which will save you up to $40,000 CAD;
- extension of the program to 2025 to encourage first-time buyers to buy housing;
- $7,500 CAD tax credit for repairs;
- one-time payment of $500 CAD to those facing housing affordability issues;
- doubling the tax credit to $10,000 CAD for first-time home buyers, etc.