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The federal Conservatives are pledging to track foreign ownership in the housing market and also boost the amount Canadians can withdraw from their RRSPs to buy their first home.
The election pledges came as Conservative Party leader Stephen Harper campaigned on Wednesday in Vancouver, where residents are growing increasingly concerned that foreign money is pushing real estate prices out of reach for many residents.
They also follow on the heels of Harper’s earlier promise to bring in a permanent home renovation tax credit if the Conservatives are re-elected in October.
The Home Buyer’s Plan allows Canadians to make tax-free withdrawals from their RRSPs to buy or construct their first home. Currently, the withdrawal limit is $25,000. Harper is vowing to raise that limit to $35,000 if the Conservatives are re-elected.
The Canadian Real Estate Association welcomed the pledge, saying 2.8 million Canadians have used the Home Buyer’s Plan since it was introduced in 1992. And CREA projects there will be $2.8-billion in spin-off spending this year as a result of purchases made under the plan.
Following the home renovation tax credit pledge, critics noted housing is one of the sectors of the struggling Canadian economy that’s doing well – suggesting there’s not an urgent need for policy stimulus from Ottawa.
The latest figures from Teranet/National Bank show home prices rose 5.1% in July compared to a year earlier -- with Vancouver up 9.9%, Toronto rallying 8.4%, and Hamilton increasing 6.7%. Calgary home prices, however, fell 2.3% as the city struggles with the fallout from low oil prices.
Harper also took aim at growing concerns about foreign buyers, vowing to collect data on foreign buyer activity in the housing market.
“If, in fact, foreign speculators are driving the cost of housing to unaffordable levels, that is something the government can, and should, find a way to address,” Harper said.
There’s little hard data available at the moment to quantify how prevalent foreign, non-resident buyers are in the Canadian market. Canada Mortgage and Housing Corporation published some preliminary findings late last year, suggesting levels of foreign ownership is in the single digits in Canada’s largest cities.