Courtesy of First National Financial – one of Canada’s leading lenders, Commercial & Residential
The Budget
The federal budget included material spending increases for housing, defense and indigenous programs mostly offset by a higher capital gains tax. Too bad for all those suckers that bought NVIDIA stock last year. Now their massive capital gains will now attract 67% of their marginal tax rate (vs. 50%)! Overall, the deficit for fiscal year 24/25 was little changed and the 5-year profile was $10 billion higher than projected in the fall economic statement.
Some housing specific items include:
Rule changes:
- Increase apartment CCA from 4% to 10% on eligible new purpose-built rental projects beginning construction between April 2024 and January 2031.
- Launch of Secondary Suite Loan Program enabling homeowners access to up to $40,000 in low-interest loans to add a secondary suite to their homes.
- Incentives to Encourage Densification (converting houses to triplex, secondary suite, etc.) by creating new opportunities for homeowners with, amongst other things, an increase in the applicable insured mortgage limit.
- Extension of First-Time Buyers Mortgage Amortization to 30yr (from 25yr) starting August 1, 2024.
- Increase RRSP HBP limit to $60,000 (from $35,000) effective April 16, 2024.
- Extension of the Grace Period to Repay RRSP Withdrawals by an additional three years for withdrawals between January 2022 and December 2025.
- Extension of the Foreign Homebuyers Ban until January 2027.
Funding:
- Additional $15B for the Apartment Construction Loan Program which provides low-cost repayable loans to builders and developers.
- Additional $1B to the Affordable Housing Fund which provides low-interest or forgivable loans for affordable housing.
- Additional $400mm to the Housing Accelerator Fund (currently $4B) to incentivize zoning removal and speed up permitting.
- Launch of a $6B new Canada Housing Infrastructure Fund to accelerate the construction and upgrading of critical housing infrastructure.
- Launch of a $1.5B new Canada Rental Protection Fund to acquire affordable rental units at risk of being sold to investors.
Others:
- The creation of a New Canadian Renters’ Bill of Rights
- The launch of the Canada Builds initiative
- The launch of Public Lands for Homes plans
Find the full Canada Housing Plan at: https://www.infrastructure.gc.ca/housing-logement/housing-plan-report-rapport-plan-logement-eng.html
Housing market
Home sales edged up 0.5% in March compared to February for a third month-over-month increase in the last four months. Active listings also edged up by 0.5%, leaving the listings to sales ratio unchanged at 3.8. On a year-over-year basis, home sales were up 1.7%.
The Teranet-National Bank composite House Price Index rose by 0.2% (seasonally adjusted) led by Vancouver (+2.7%) and moderated by Montreal (-0.9%) and Toronto (-0.6%). The composite index is now down 3.3% from peak set in April of 2022. The table below shows HPI stats for various metropolitan areas. Note how the change from peak prices is different across regions.
![](https://mortgagelogic.ca/wp-content/uploads/2024/04/mc-2-24.jpg)
According to Statistics Canada, Canadian Mortgage credit was up 3.4% year-over-year in February, little changed from the prior month. This is a notable slowdown from the double-digit growth rates seen during the low-rate period of the pandemic. Still, even this more modest growth in credit is evidence of a stable housing market.
Looking ahead, strong demographic growth, low vacancy rates and a central bank poised to cut rates should provide a constructive foundation (no pun intended) for housing activity in the coming months.
Gold-because no one asked…
Police arrested six people this week in a multijurisdictional investigation into the theft of $20 million in gold bars at Toronto Pearson Airport. Warrants have been issued for others, including Air Canada employees. Unfortunately, the culprits did NOT use modified Minis to make a getaway through TTC subway tunnels.
In the meantime, the spot price of gold is reaching new all-time heights, trading at $2,375. Good news for gold holders…except for the new capital gains tax.