Finance Committee on Oct. 1st, 2025

[Mike Moffatt]

CMHC projects that housing starts will fall about 4% a year for the next couple of years. They will be about 30,000 units lower than they were in 2023. It's housing sales, preconstruction sales, that are in absolute free fall. In the GTA, condo preconstruction sales are down about 90%. Ground-oriented home sales are down about 70%. Today's sales are next year or the year after's housing starts. It's why we're seeing housing starts fall in the future, because we're just not seeing those new home and preconstruction sales today.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

That's time.

Next, we have Mr. Turnbull.

You have the last round.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks, Chair, and thanks to all of the witnesses for being here.

Mr. Moffatt, I will probably direct most of my questions towards you. I have often admired your work, and you've given lots of great advice on how we can solve the affordable housing crisis in this country. I appreciate your being here. I appreciate your expertise and perspective. I would say I'm inclined to agree with you in many cases. In this case, I'm not sure I agree with some of your opening remarks.

You said housing starts are projected to fall with the CMHC projections. I wanted to ask you whether those projections would take into account all of the things that the federal government is proposing to do within the Build Canada Homes initiative, some of which hasn't rolled out yet. I assume the answer is no, but could you confirm that for me?

[Mike Moffatt]

I can't either confirm or deny that, because I don't have access to the CMHC's modelling. Their forecast came out in July, so I would hope they would include those things, but their model is proprietary, so I don't have access to the assumptions.

[Ryan Turnbull, Liberal, Whitby, ON]

I'm wondering whether they would really have the details, when those details are still being worked out. I guess that's why I would suggest that their projection couldn't have taken into account all of the things that would be rolled into Build Canada Homes. Obviously, the GST rebate is one thing that we're doing, as well as cutting development charges. Obviously, municipalities as our partners are using federal lands, which lowers acquisition costs. We're encouraging buy Canadian, which should shorten supply chains slightly, and embracing innovation in terms of construction methods, modular prefab, etc.

I'm not telling you anything you don't know, but I'm listing these things because they seem pretty significant to me—approvals and permitting and speeding those up through the housing accelerator fund, which, as we've heard from many municipalities across the country, has been dramatically helpful. Interest rates, obviously, we don't control, but the Bank of Canada has also lowered some of the interest rates. We've also committed to helping fund the housing infrastructure that's needed.

With all of these things together, do you anticipate that housing starts will still continue to fall based on all of those measures in Build Canada Homes?

[Mike Moffatt]

Yes, I do, at least through 2027. I think many of those measures, which we certainly support, will take time to show up. Many of those involve homes that are in the design phase. Remember that the CMHC counts a housing start when a foundation reaches grade level. That is often two to three years before sales begin. Part of it is how the CMHC measures what a housing start is. I would hope in the upcoming budget there are projections of housing starts provided by the finance department that do take those things into account. I think that would be incredibly helpful.

[Ryan Turnbull, Liberal, Whitby, ON]

That's great.

Would you also clarify why you would suggest cutting GST for all homebuyers? I think homebuyers who already have a home are accumulating equity and benefiting from the appreciation value in those homes upon resale. It seems to me that we're here talking about measures that can help first-time homebuyers get into a market that they've been excluded from due to cost barriers.

We heard from officials just before you came that 97% of new homes are under $1 million and another 3% are between $1 million and $1.5 million. This measure of the GST rebate really does target first-time homebuyers. I'm wondering, because I don't understand the rationale for why we would want to help out individuals who have the benefit of owning equity in a home, rather than targeting first-time homebuyers.

[Mike Moffatt]

There are a couple of things. First, the PBO has different figures from that 97%. I would question that. We've seen different figures out there. It's certainly above 90%. I think the overall way to look at it is that we need to lower costs across the system.

For example, if we made it easier for a young couple to move out of a one-bedroom condo into a family-sized home, that not only helps that family but also frees up that condo for the first-time homebuyer. Housing is a system, and we shouldn't look at it saying that we want to make the water in this part of the bathtub warmer. We have to realize that what happens on one end of the housing spectrum affects the entire spectrum. The government understands this, because one of the arguments that the government has made on building social housing is that it relieves pressure on market housing. It frees up low-rent market housing and puts downward pressure on those rents. We have to understand that housing is a system. It's not just helping individual people but making the system as a whole work better.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

That's time. Thank you to all of our witnesses. Thank you for taking it easy on me today.

Is it the will of the committee to adjourn the meeting?

[Some hon. members]

Agreed.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

The meeting is adjourned.