There were no new measures to further cool the Canadian housing market in today’s tabling of the Federal Budget – though a good chunk of change has been set aside to improve the collection of home purchasing data, including foreign buyer activity.
A total of $300 million to be spent over the next 10 years on gathering housing market data was announced by federal finance minister Bill Morneau, $39.90-million of which is earmarked for Statistics Canada’s foreign buyer study, as well as info on homeowner demographics and mortgages.
The spending is a small portion of an $11.2-billion commitment to improving the supply of affordable housing over an 11-year timeline.
Efforts to Uncover Extent of Foreign Investment
The initiative to gather better data will hopefully fill in the gaps on the extent of foreign investor activity in Canada’s housing market, and give policy makers a solid basis for future tweaks to real estate and mortgage borrower rules. While several provinces have started collecting their own data and implementing their own measures (such as the 15% foreign buyer’s tax introduced in Metro Vancouver), the lack of national data on the issue has been widely panned by housing critics and economists.
“It’s just a disgrace how bad our data is. How can you make informed policy if you don’t have better data?” said Bay Street money manager John Stephenson in a recent interview with BNN. “We don’t know who the buyers are, we don’t know where they come from, we don’t know if they live here. There’s very little data, there’s very little transparency.”
In response to today’s announcement, Royal Bank of Canada Chief Economist Craig Wright told CTV, “This is much needed. You can’t manage what you can’t measure.”
The initiative will also provide Crown Corporation Canada Mortgage and Housing Corporation (CMHC) with $241 million in funding and be used to create the Housing Statistics Framework – a database of all properties and real estate purchase activity in Canada – with a total price tag of $291 million.
No Changes to Capital Gains Tax
While slight tweaks and scale backs of tax credits (including the Transit tax credit and phase out of Canada Savings Bonds) were announced, there was no word of upping the margin on capital gains tax as recently requested by Ontario Finance Minister Charles Sousa, which would have had consequences for sellers of non-principal residences, investors, and small businesses. Sousa implored the federal government to consider upping the tax rate from 50% to 75% this week, as part of efforts to cool speculation in the province’s housing market, and especially in the Toronto real estate market.