Canada budget 2024: Housing strategy could inflict short-term pain, say industry watchers
A long-run focus on boosting housing supply in Tuesday’s federal budget is earning praise from the housing and real estate industries, but some are questioning whether the efforts might make the country’s affordability issues worse in the short term.
“Allowing first-time buyers to make larger RRSP withdrawals for down payments, or secure 30-year amortizations when they buy new construction, will increase buying power and bring more people to the market at a time when there’s already a shortage of properties to bid on,” said Clay Jarvis, personal finance author at the website NerdWallet, in reference to two measures the Liberals had telegraphed ahead of the budget announcement.
“Competition may not increase by much, but we don’t need it to increase at all,” he said.
Currently, Canadians can withdraw up to $35,000 from their Retirement Savings Plan (RRSP) tax-free for their first home purchase, but the federal budget proposes increasing that limit to $60,000. The Liberals are also extending the maximum amortization period for first-time buyers purchasing newly built homes to 30 years from 25 years, a change that would lower monthly payments.
Karen Yolevski, chief operating officer of Royal LePage Real Estate Services Ltd., applauded those measures and additional efforts to increase supply, but emphasized the need for concrete action.
“Initiatives aimed at making it easier for young Canadians to enter the market are welcome…. However, without a material increase in supply, further upward pressure will be placed on home prices,” Yoevski said in an email.
Toronto Regional Real Estate Board chief market analyst Jason Mercer, also expressed concern about the anticipated rise in demand over the next few years.
“We need to see
Read more on financialpost.com
