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Can budget measures relieve the cost of homeownership?
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Many of the budget’s housing measures, such as eliminating the goods and services tax for first-time buyers on homes at or under $1 million and launching the Build Canada Homes agency, were already announced. But the combination of incentives and supply stimulus could help out first-time homebuyers, according to one real estate executive.
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A centrepiece of the Liberals’ housing plan is Build Canada Homes, a new federal agency first announced in September with a mandate that includes building community and co-op housing for low-income households and increasing the supply of affordable homes for the middle class. The budget proposes allocating $7 billion toward a five-year commitment of $13 billion.
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Phil Soper, chief executive officer of real estate brokerage Royal LePage, said Build Canada Homes is “the most detailed vision” the country has seen in the past 20 years for tackling the housing affordability problem.
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“If they can continue to add supply through stimulus to the private sector and what they do directly, it could keep home prices below the rate of wage and salary inflation for a few more years and give people a chance to catch up.”
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Soper said demand-side policies such as the elimination of the GST for first-time homebuyers on new homes under $1 million, which was first announced in March and included in the budget, can attract more people to a market where there aren’t enough homes.
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“If we’re building enough homes and home prices are rising modestly at three or four per cent a year and then you add incentives for a specific target group, say first-time homebuyers, then things work out beautifully,” he said. “But if you’re not building the new homes and you’re just putting incentives in front of people, you’re shooting yourself in the foot.”
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The federal government likely will not meet its goal of doubling the current rate of residential construction over the next decade due to market conditions, said Robert Kavcic, senior economist at BMO Capital Markets. One reason is that Canada does not have the capacity to double the rate of construction activity relative to what we have now, he said.
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“The other aspect is that when demand falls off, supply tends to fall, and what you’re seeing out there on the ground today is very little new home sales activity, which is ultimately going to pass through to lower construction activity down the road,” he said.
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In other words, there may not be enough supply to spur homeownership among millennials and gen Z, whose rates of homeownership are dropping, according to a recent Re/Max Canada poll.
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Will budget commitments support more jobs for young Canadians?
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Younger Canadians have been bearing the brunt of reduced hiring in many sectors of the economy, reflected in a higher youth unemployment rate. As of September, the national unemployment rate among all Canadians was 7.1 per cent, but more than double that for those aged 15 to 24, at 14.7 per cent, according to Statistics Canada. This marked the highest unemployment rate for youth since September 2010, excluding 2020 and 2021, during the COVID-19 pandemic.
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The budget included a few programs to support jobs for youth, which, if approved, would be implemented starting as soon as next year.
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It proposed providing $594.7 million over two years, starting in the 2026-27 fiscal year, to Employment and Social Development Canada to support about 100,000 jobs through Canada Summer Jobs in summer 2026. It also proposed another $307.9 million to go toward employment, training and “wraparound supports,” which would include mentorship, transportation and mental health counselling, to about 20,000 youth facing employment barriers each year, over the next two years.
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