What Market-Watchers Are Saying About the Liberals’ New Housing Plan

A large chunk of the Liberal Party of Canada’s ambitious $130-billion platform is dedicated to housing. Here’s how market-watchers are responding to Prime Minister Mark Carney’s plans.

By Josh Sherman | 3 minute read

Having formed a minority government, the Liberals will need buy-in from other parties to achieve its mandate.

Canada’s newly elected Liberal government ran on a bold promise to double the pace of homebuilding, ratcheting construction up to about 500,000 units annually, but while many agree the country needs more housing, at least one major plank of the party’s proposal has already proven divisive.

A much-talked-about component to the plan is establishing a new public developer, marking a return to homebuilding for the federal government. The Canadian government played an active role in delivering housing following the Second World War, but has been absent from the field for decades, instead favouring measures such as financing to support homebuilding.

Some in the industry have taken issue with the idea of the government returning as a developer. “That’s something we should completely take out of the conversation – more government,” Sherry Larjani, the president and founder of Toronto-based homebuilder Spotlight Development, told Storeys. “Housing should be left to the experts we have now.” The online real estate magazine reported several other developers shared the same sentiment.

Before election day, the Smart Prosperity Institute, an Ottawa-based thinktank, was warmer on the idea. However, in a blog post, the Ottawa-based thinktank noted challenges ahead. For one, unlike during the mid-century era, the government likely won’t be constructing easier-to-build single-family homes in major markets.

“Instead, the focus should be on missing middle type housing, such as fourplexes and small apartments,”  according to the blog post. “This will prove challenging, as these homes take longer to build than single-detached units, municipal permitting problems are lengthy and unwieldy, and the Building Code makes the housing typologies ‘ill-fitting’ for many families,” the blog post stated. 

The proposal for a publicly owned development corporation is just one of several notable Liberal housing policies that emerged during the election cycle. The federal government says it is planning to cut red tape for developers as well as taxes for homebuyers.

Regarding so-called red tape, the Liberals intend to wade into municipal territory with the aim of getting local development charges slashed by 50%. In some parts of the Greater Toronto Area, these fees can add upwards of $100,000 to the cost of a new home. Those in the development industry have long called for development-charge reform. The federal government would achieve the reduction by providing funding to municipalities in lieu of the fees, which municipalities use to pay for infrastructure. “If the federal government is interested in cutting those development charges, they would have to be recouped somewhere, or all growth grinds to a halt,” Calgary Mayor Jyoti Gondek told CityNews following the election.

A goal of repurposing existing buildings for affordable housing is also in the plan.

As well, the Liberals intend to bring back a tax incentive from the ‘70s that spurred a rental-housing boom. This incentive gave tax breaks to those investing in purpose-built rental housing. “It helps get private capital into the market,” Adrian Rocca, the CEO of Fitzrovia, a developer supportive of the proposal, told Storeys.

For first-time homebuyers, the Liberals say they’ll eliminate the Goods and Services Tax (GST) on new homes up to $1 million. The policy has been popular, with Conservative candidate Pierre Poilievre first floating a similar idea.

Some say Carney’s proposed rebate should go further, particularly in expensive markets such as Toronto or Vancouver, where the average price of a detached house is over $1 million.