The Ontario Real Estate Association (OREA) is urging the provincial government to implement growth-friendly policies and use the housing market to stimulate Ontario’s economic recovery.
OREA made a slew of recommendations in its report, Rebuilding Ontario: A Framework for Recovery, which focused on Covid-19’s impact on the province’s real estate sector.
“The aftermath of the COVID-19 pandemic reminds us how important the housing sector is to Ontario’s economic health,” OREA CEO Tim Hudak said in a statement. “The key instrument for economic recovery in Ontario is the sale of homes, which will result in an injection of more homes on the market and create spin-off jobs and consumer spending.”
Hudak says the government should implement policies that are focused on growth, including the temporary elimination of the Land Transfer Tax (LTT) to make homes in the province more affordable and bring more homes into the market to address the province’s supply shortage. OREA points to statistics from Altus Consulting Group, which indicate that a six-month holiday on the payment of LTT for the first $600,000 of a home’s value could result in the sale of an additional 32,000 homes and create 31,000 jobs.
According to an online survey conducted by Nanos Research for OREA’s report, about one-third of the respondents said they are likely (13%) or somewhat likely (17%) to purchase a home sooner if the province introduces an LTT holiday. The Nanos survey results, based on the responses from nearly 1,200 residents in Ontario aged 18 and above, were released on September 21.
Most respondents also regard housing as an important (60%) or somewhat important (32%) contributor to the provincial economy, the survey says.
“Despite the uncertainty brought on by the COVID-19 pandemic, Ontarians continue to tell us that buying a home is a good investment,” says Hudak. “Real estate saved our economy during the last downturn, and it can once again be the locomotive that gets us back on track.”
OREA also recommends permanently increasing the LTT rebate from $4,000 to $6,000 for first-time home buyers and introducing a home renovation tax credit like the one implemented by the federal government in 2009 to kickstart the economy.
If a sector-wide home renovation tax credit is deemed too expensive, OREA recommends a home renovation tax credit targeted at renovations that allow Ontario’s seniors to age-in-place. The tax credit should be refundable and made eligible only to mobility or accessibility renovations for those aged 65 years and above, says the OREA report.
Other recommendations include increasing the property value for each LTT bracket under $2 million in value to reflect rising home prices in the province and help families save on LTT costs. The report also calls for expediting the implementation of Bill 108 to shorten building approval timelines and get buildings under construction faster.
A recent Scotiabank survey revealed that only 38% of Canadians believe that now is a good time to buy a new home. Younger Canadians appear to be more optimistic about purchasing a property during the COVID-19 pandemic.
According to the 2020 Scotiabank Housing Poll released on September 17, nearly 20% of Canadians between the ages of 18 and 34 said the pandemic had accelerated their plans to purchase a home or investment property to take advantage of the lower interest rates and home prices. One-third (36%) of respondents in this age bracket believe that the pandemic will drive down housing prices, compared to 24% of Canadians aged 35 to 54, and 17% of Canadians aged 55 and above.
While not all Canadians are ready to buy a property in this economic climate, people are spending more time at home than ever. A quarter of the respondents in the Scotiabank poll said they are seriously considering renovating their current homes, but half of them do not yet know how to finance their home upgrades.
“The pandemic has caused many Canadians to turn their living rooms into classrooms, their dining rooms into offices, and their basements into home gyms. This is motivating many to consider investing more in their current homes or re-evaluating their living spaces altogether,” John Webster, Scotiabank’s Head of Real Estate Secured Lending & Scotia Mortgage Authority, said in a statement.
Jean Lian is Head of Communications and Brand Marketing with HomeLife Realty Services Inc. in Toronto. Contact Jean at email@example.com.