Thank you for giving me the opportunity to appear before you today.
The introductions have already been made, so I'll begin with my remarks.
We are pleased to be here to discuss with you the issue of rising housing costs and public policy measures to address this issue.
Housing affordability is obviously a major issue in Canada. While there are many dimensions to the challenge, our overall assessment is that affordability remains stretched primarily because supply has not been able to keep up with strong demand. That's consistent with Mr. Dugan's views.
Encouragingly, there are record numbers of new housing units under construction in many cities across Canada, which means builders are responding to this challenge. However, the scale of the issue is great. You heard the numbers from Bob about the 3.5 million additional housing units that would need to be built to restore affordability by 2030.
That increase will be challenging and will need to overcome significant barriers to ramping up construction. Municipal rules and practices like restrictive zoning, high development fees and long approval times are widely recognized as major impediments to this needed supply. Supply chain bottlenecks and labour shortages are also increasing the cost and the time that it takes to build a home.
We know that this challenge cannot be solved by one level of government alone. It will require a strong, coordinated effort on the part of home builders and all governments involved. The federal government has taken a comprehensive series of measures to address these challenges and to be able to provide new affordable housing to Canadians. However, it will take time for these measures to stimulate supply to take full effect.
To help address municipal barriers, among other initiatives, the government launched the $4-billion housing accelerator fund, or HAF. It encourages and helps municipalities to eliminate municipal barriers to housing and stimulate the creation of new housing.
As you know, the government also recently introduced legislation to implement a major tax change to increase the supply of rental housing. The proposal would temporarily eliminate the GST on new rental housing built for this purpose. This measure has been in effect since September 14, 2023, subject to the passage of the bill.
As FINA is well aware, housing affordability is a multi-faceted issue that affects all Canadians. The department is continually studying housing affordability issues and the effects they may have on financial stability and housing costs.
To address concerns that property flipping is driving up the cost of housing, budget 2022 introduced new rules to ensure that profits from properties held for less than 12 months are fully taxed, with certain exceptions for unexpected life events.
To ensure that homes would be owned by Canadians rather than foreign investors, the government announced a two-year ban on non-Canadians buying residential property in Canada in the 2022 budget. The ban came into effect on January 1, 2023.
Budget 2022 also included tax measures to make housing more affordable for first-time homebuyers. It enhanced the first-time homebuyers' tax credit and introduced the new first-time homebuyers' savings account, which financial institutions began offering this year.
Housing finance is another important part of the government's comprehensive suite of solutions to build more homes in Canada. Earlier this week, the Minister of Finance announced an increase in the annual limit for Canada mortgage bonds from $40 billion to up to $60 billion, which will be designated exclusively for funding mortgage loans on multi-unit rental projects insured by CMHC. This measure will increase access by developers and builders to cost-effective financing for multi-unit rental construction, which will in turn help to build up to an estimated 30,000 more rental apartments per year.
The government recognizes that rapid increases in interest rates have made it harder for some Canadians to make their mortgage payments. That's why the government has taken steps to ensure that federally regulated financial institutions are providing Canadians with fair and equitable access to mortgage relief measures appropriate to borrowers' circumstances. Notably, in July 2023, the Financial Consumer Agency of Canada published its guideline on existing consumer mortgage loans in exceptional circumstances following a public consultation process, which will assist financial institutions in adopting fair and consistent approaches when they offer relief measures to Canadian consumers.
Finally, the government is continuing to invest in affordable housing through the $82-billion-plus national housing strategy, which includes more than $48 billion in federal support for the construction and repair of rental housing, affordable housing and shelters; more than $15 billion in allocated joint funding with provinces and territories; more than $11 billion to support community and social housing; nearly $4 billion allocated for Reaching Home, Canada's homeless strategy; and more than $3 billion in additional national housing strategy support, including the one-time top-up to the Canada housing benefit.
As you can see, the government has implemented a wide range of measures to address various aspects of the affordable housing issue. I'm pleased to be joined by colleagues from Canada Mortgage and Housing Corporation and Infrastructure Canada, who are leading the national housing strategy programs, as well as the colleagues mentioned earlier.
We will be happy to answer any questions you may have.