{"id":19976,"date":"2023-07-26T02:07:57","date_gmt":"2023-07-26T09:07:57","guid":{"rendered":"https:\/\/essential.construction\/news\/chba-urges-feds-to-implement-policies-to-combat-inflation\/"},"modified":"2023-07-26T02:07:58","modified_gmt":"2023-07-26T09:07:58","slug":"chba-urges-feds-to-implement-policies-to-combat-inflation","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/chba-urges-feds-to-implement-policies-to-combat-inflation\/","title":{"rendered":"CHBA urges feds to implement policies to combat inflation"},"content":{"rendered":"

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The federal government says there is a need to double housing starts and build 5.8 million new homes over the next decade to address the current housing supply crisis.<\/p>\n

However, rising interest rates are increasing housing costs and contributing to inflation, which means there will be less housing units of all types built, Canadian Home Builders\u2019 Association (CHBA) president Kevin Lee told the Daily Commercial News.<\/p>\n

\u201cThrough the pandemic we had low interest rates and as a result we had some really good housing starts numbers over the course of two years.<\/p>\n

\u201cThe challenge was that it was driving house prices up, but it was resulting in more homes being built,\u201d explained Lee.<\/p>\n

Now it\u2019s the opposite. Interest rates have gone up so much that house sales dried up and it\u2019s going to be a much slower year in terms of housing starts in 2023.<\/p>\n

\u201cThe question is how do you find the right balance?\u201d Lee said.<\/p>\n

\u201cYou don\u2019t want house prices escalating way too much because of super low interest rates and super high demand. But you also don\u2019t want the situation we\u2019re in right now where we thought we had a bit of a pause in the wintertime and house sales and home sales were starting to come back so we were thinking, \u2018OK, maybe it\u2019s not going to be too bad of a year with house starts.\u2019 Now, with another two sets of rate hikes, it\u2019s going to slow down the market again.\u201d<\/p>\n

The CHBA is calling on the federal government to implement certain policies to help supply get back on track.<\/p>\n

\u201cHopefully interest rates are going to come down as everybody expects over the next year or two, but even at that point we need to not just get back to business as usual\u2026we need to be increasing our housing starts so we\u2019re going to need some policy help to make that happen,\u201d Lee said.<\/p>\n

Targeted measures will allow well-qualified first-time buyers to enter the market.<\/p>\n

\u201cWe really feel like we need to get 30-year amortizations for insured mortgages for well-qualified first-time buyers,\u201d he said.<\/p>\n

\u201cWhat that enables first-time buyers to do is have lower monthly payments because they\u2019re spreading their mortgage over 30 years.\u201d<\/p>\n

While it\u2019s an important move, just helping first-time buyers isn\u2019t going to fix the problem.<\/p>\n

\u201cWhat it will do is help them get into the market and spur more demand in terms of supply and enable builders to build more entry level homes for first-time buyers,\u201d Lee added.<\/p>\n

Another way to help with affordability is to update the GST New Housing Rebate thresholds, which were set in 1991 and have not changed since even though house prices in Canada have more than doubled on average over that period.<\/p>\n

\u201cRight now you can get the GST rebate if your house is less than $350,000. Well in a lot of urban centres that\u2019s not possible. You can\u2019t get any house, any home, even a condo in some cases, for less than that,\u201d Lee said.<\/p>\n

Changing the GST thresholds would support purpose-built rental as well.<\/p>\n

\u201cOne of the things that\u2019s happened over the past two to three decades is we\u2019ve had very little purpose-built rental,\u201d said Lee. \u201cWe think it\u2019s really time to get rid of GST and HST on purpose-built rental properties and that would make the development model and the business model for building those much more viable.\u201d<\/p>\n

More investment for housing-enabling infrastructure is another tool the federal government could use. It would help accelerate more development and ideally alleviate the \u201castronomical development charges\u201d being levied against new projects, a CHBA release states.<\/p>\n

\u201cThis has been a couple of decades in the making to get into this position so there is no silver bullet for all of this, but we do need a comprehensive approach,\u201d Lee said.<\/p>\n

\u201cWe need municipalities on board with helping to support more supply of all sorts of new construction: infill, gentle densification\u2026We need to understand that development taxes have gone up by 700 per cent in the past 20 years which is part of the reason why new housing is so expensive.<\/p>\n

\u201cWe need those ideally to come down and we need infrastructure investments to help offset some of those costs and make new development possible.\u201d<\/p>\n

Follow the author on Twitter @DCN_Angela<\/a>.<\/strong><\/p>\n<\/p><\/div>\n