Cana­dian Press

Cana­dian home­builders and real estate bro­kers say the stay-the-course fed­eral bud­get ignores mea­sures that would make new houses more afford­able as real estate prices con­tinue to rise.

This year’s bud­get did not include any sig­nif­i­cant mea­sures for the real estate indus­try, in a sharp con­trast to the 2009 bud­get, which tried to kick­start a slump­ing indus­try with mea­sures to make hous­ing more affordable.

That bud­get raised the amount home­buy­ers could with­draw from their RRSP to put toward a down pay­ment to $25,000 from $20,000 and intro­duced a tax credit for first-time homebuyers.

Those incen­tives sur­vived in Thursday’s bud­get, but the pop­u­lar home ren­o­va­tion tax credit intro­duced last year did not.

Finance Min­is­ter Jim Fla­herty called Canada’s hous­ing mar­ket “healthy and sta­ble” in his bud­get address.

The Cana­dian Home Builders’ Asso­ci­a­tion said it was dis­ap­pointed in Flaherty’s deci­sion against intro­duc­ing a per­ma­nent replace­ment for the ren­o­va­tion tax credit, which allowed home­own­ers to save up to $1,350 on qual­i­fied ren­o­va­tions of between $1,000 and $10,000.

“A per­ma­nent 2.5 per cent GST home ren­o­va­tion tax rebate would restore fair­ness to how home ren­o­va­tion is impacted by the GST, and also go a long way to com­bat­ing the mas­sive under­ground “cash” activ­ity in home ren­o­va­tion”, said its pres­i­dent Gary Friend.

He said the bud­get also missed the oppor­tu­nity to imple­ment changes to the GST new hous­ing rebate.

“This is the sin­gle most impor­tant step the fed­eral gov­ern­ment can take to pro­tect hous­ing afford­abil­ity and choice. What Cana­di­ans need now are per­ma­nent poli­cies that end the ero­sion of hous­ing afford­abil­ity,” he said.

When the GST was intro­duced in 1991, a full GST rebate applied to homes sell­ing for $350,000 or less, he said, adding that while those homes cost $550,000 today the rebate level has not changed.

The Cana­dian Real Estate Asso­ci­a­tion, which rep­re­sents 96,000 real estate agents, also said some afford­abil­ity mea­sures the trade group had been call­ing for were left out of the fed­eral budget.

The association’s chief econ­o­mist Gre­gory Klump said it had been ask­ing for an expan­sion of the tax credit offered to first time home­buy­ers and that it be indexed to infla­tion, which would have made homes more afford­able for all.

He added CREA wel­comed the government’s plan to stan­dard­ize the cal­cu­la­tion and dis­clo­sure of mort­gage pre-payment penal­ties through reg­u­la­tion to bring clar­ity for consumers.

But Klump said he didn’t expect any changes to the resale hous­ing mar­ket, given that Fla­herty intro­duced new fed­eral mort­gage rules that require stricter con­di­tions when Cana­di­ans apply for loans.

“We’re sat­is­fied that no fur­ther reg­u­la­tory action needs to be taken,” he said.

Klump added that Canada’s cur­rently hot hous­ing sec­tor reflects nor­mal mar­ket activ­ity dur­ing a time of eco­nomic recov­ery, adding that it is expected to drop off later this year when the Bank of Canada is widely expected to raise inter­est rates to fight infla­tion­ary pres­sures in the economy.

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