Evidence of meeting #7 for Finance in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.
A recording is available from Parliament.
5:10 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
We'll now move on to the question and answer portion.
We'll start with Mr. Turner, for five minutes.
5:10 p.m.
Liberal
Garth Turner Liberal Halton, ON
Thank you very much.
Thank you to all the witnesses for coming today. We really appreciate hearing your testimony. Thank you.
I'm going to pick on Mr. Beauchamp for a moment.
It's nice to see you again, sir. I want to direct a couple of questions to you, and then my colleague Mr. Regan will be taking the rest of my time.
We have such an accumulation of family net worth in residential real estate. I think we're at historic high levels at the moment. Your industry is now extremely important, for many reasons, in our economy. Can you address the issue of affordability for a minute? Mortgage rates have risen in the last few months, and so have resale home prices.
Are we getting an affordability crunch?
5:15 p.m.
Chief Executive Officer, Canadian Real Estate Association
Well, if you look at what has happened and the predictions that are made for the future, then by and large, I think, we're looking at a stabilization of the experience that we've seen with respect to prices and with respect to the market itself.
We have experienced in the last year, particularly, a very buoyant situation in Canada. We expect that next year the markets and average prices will possibly be reduced slightly. We simply expect a soft landing as we have predicted already. We do not see a major crunch.
5:15 p.m.
Liberal
Garth Turner Liberal Halton, ON
Let me just come back to that point, because in the United States, obviously, we've had a very serious situation with real estate values. The sub-prime crisis has moved over and brought residential prices down. I think I just heard you say that you might anticipate residential retail real estate prices being slightly lower next year than they are this year.
5:15 p.m.
Chief Executive Officer, Canadian Real Estate Association
In certain areas, yes, but you can't talk for all markets. You have to remember that the situation in Canada is totally different from what was experienced in the States.
5:15 p.m.
Liberal
Garth Turner Liberal Halton, ON
Yes, I know--so far. You're absolutely right. But my concern is that you're asking for an increase in the homebuyers plan. I understand the reason you're asking for an increase, but you also have a chart here showing that the average down payment as a percentage of the purchase price has declined rather precipitously. We now have somewhere around 90% financing of the average home, presumably a new homebuyer.
If we have any decrease coming in prices, in real estate values, is this not a recipe for disaster for people getting into real estate purchases with 5% down?
5:15 p.m.
Chief Executive Officer, Canadian Real Estate Association
Well, let's look at what's happening with the homebuyers plan. If you look at its effectiveness since 1992 in Canada, if you look at the experience last year where 53,000 homes were bought in 2006 using that particular plan, you're looking at a plan that enables Canadians not only to get involved in a home, but also at the same time to marry it with their retirement vision.
5:15 p.m.
Liberal
Garth Turner Liberal Halton, ON
No, I understand that. My very specific question was that if prices are going to go down a little bit next year--
5:15 p.m.
Chief Executive Officer, Canadian Real Estate Association
I don't think you should hang on that in all areas, because if you look at the activity in the markets in the west, for example, and I'm looking at Calgary and Vancouver--
5:15 p.m.
Liberal
Garth Turner Liberal Halton, ON
Yes, well, they're going up forever, we know that.
My point was that if people in my riding are buying houses with 5% down this year, and we may see a slight decrease in the average value of a home next year, they go from 5% equity to zero. Isn't that a concern of the industry?
5:15 p.m.
Chief Executive Officer, Canadian Real Estate Association
I don't think the decrease would be such as to have impact in that particular area. With respect to our history, next year, in our view, will be the second-largest record on MLS, for example. This year, 2007, will be the top record up to now. Next year we're predicting will be the second-highest.
So we're not looking at markets decreasing here, or values going down, in that fashion--
5:15 p.m.
Liberal
5:15 p.m.
Conservative
The Chair Conservative Rob Merrifield
Yes, Mr. Regan, the time is finished. He swallowed it all, I'm sorry.
Monsieur Crête.
5:15 p.m.
Bloc
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Thank you.
Mr. D'Amours, I want to say that I am an ally of yours, as is the Bloc.
There can be no more sustainable development than mass transit. Cities like Toronto and Montreal are going to have subway systems that will be built domestically, in La Pocatière to be specific, which doubles the bang for the buck.
I would like you to explain your request for more funding effort, namely the $2 billion you mention. In the text, you say that the $2 billion will partly replace the present investment of $1.3 billion.
Could you be more specific?
5:15 p.m.
Director, Public Affairs, Canadian Urban Transit Association
Thank you for the question, Mr. Crête.
Yesterday, I arrived in Montreal by train and saw the traffic congestion on the roads. I met the leaders of a number of transit companies in Quebec. These companies, as you have said, have development plans. For transit, a development plan can extend over a decade. Now, what often happens is that government programs last for four or five years.
The Canadian Urban Transit Association is asking for $2 billion per year, and for the money to be available for many years. That is part of our request for a national transit strategy.
5:20 p.m.
Bloc
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Thank you. it is interesting to see secondary benefits that no one had expected. Subway cars made in La Pocatière could have windows made in the Prelco factory in Rivière-du-Loup. And it will improve the environment in our big cities. It is an interesting project and I thank for you for it.
Mr. Beauchamp, I am quickly going to read the recommendation on the home buyers' plan
The lack of inflation adjustment is an obvious oversight in the design of the national Home Buyers' Plan. The maximum HBP loan available should immediately be raised to $25,000, and adjusted every five years to account for consumer price inflation.
You were wondering if you had the support of political parties. The Bloc Québécois certainly supports the recommendation, for one. Could you explain the kind of effect that this indexing would have, that is, if the program amount went from $20,000 to $25,000 immediately?
5:20 p.m.
Chief Executive Officer, Canadian Real Estate Association
If you look at the SIA/MLS system, you will see that the average house price in Canada has gone up by 85% in the period from 1992 to 2006. The consumer price index has gone up by 27% in the same period. If the maximum loan available from the plan were indexed to inflation, it would be more than $25,000 today. So I do not think that it is unreasonable to consider an increase after such a long time. We believe that we have the support of Canadians, and of a number of MPs, but we are asking for your support again. We feel that it is important to make the change now.
5:20 p.m.
Bloc
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
So if I understand correctly, you like coming to see us, but if indexation were built into the act, the problem would solve itself over and over again.
5:20 p.m.
Chief Executive Officer, Canadian Real Estate Association
Yes, that is right.
5:20 p.m.
Bloc
Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Thank you very much for the clarification.
5:20 p.m.
NDP
Thomas Mulcair NDP Outremont, QC
Mr. Chair, a point of order on decorum. I wanted to wait until we had finished.
This is twice now that our work has been interrupted by cellphones and other electronic devices in the room. Would you please tell people to turn them off?
5:20 p.m.
Conservative
The Chair Conservative Rob Merrifield
Yes, it's a good point. If there are cellphones in the room, please put them on vibrate or turn them off, one or the other.
Mr. Wallace, for five minutes.
5:20 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
Thank you, Mr. Chair.
Thank you, everyone, for coming. I have only five minutes, and I'm going to try to talk to most of you, albeit very quickly.
I'm going to start with CUTA. I'm from Burlington. I'm actually a big supporter of urban transit, and have been in the past. My colleagues will affirm that. I talk to them about it too often.
I have a fairly quick question: any money from the federal side, your organization is expecting for capital, not for operating?
