Investment Policy Could Affect Investors

Recent research finds government plans to handle housing affordability could mean lower profits for investors.

The study which is entitled Code Red: Rethinking Canadian Housing Policy, published by advocacy group Generation Squeeze, focused on the time it takes Canadians to save up for homes.

“It used to take 5 years for a typical young Canadian to save a 20 percent down payment on an average home. Now it takes 12 years across country. 15 years in Metro Toronto. 16 years in all of BC and 23 years in Metro Vancouver,” the author of the study said.

“Even at historically low interest rates, it then takes the typical young Canadian an extra month of work per year to pay the mortgage. In Metro Toronto and all of BC it takes an extra 2.5 months,” he added.

Furthermore the study went on to point out numbers of proposals for handling affordability, which includes charging property investors- both domestic and foreign with higher taxes.

“We face a similar scenario today with respect to housing, and the need to adapt policy across the country. That is why the latest study published by Generation Squeeze is a solution- oriented document,” the Executive Director Eric Swanson said. “It offers 10 propositions for rethinking Canadian housing policy. We offer them as conversation starters.”  The propositions include:

• Taxing net housing profits, not just gross profit
• Know low interest rates and reduce both ways for younger generations
• Increase rental accommodation
• Increase below –market housing
• Not allowing child care, parental leave etc while increasing second, third and fourth mortgage payments
• Not looking at taxing the housing wealth of foreign investors

It came to the realization that making housing more affordable while safeguarding existing home values is a hard task.

“That is why it is imperative for political parties to turn their attention in advance of the 2017 election to the broad range of costs squeezing young adults. We can help ease the housing squeeze by no longer tolerating child care, parental leave, transportation, etc. adding up to second, third and fourth mortgage payments.”