Tembo Financial September 23, 2021 No Comments

Tembo outlined what the three big parties promised on real estate in three blog posts. Given that the Liberals have been re-elected, let’s recap what they promised, and what changes (if any) are in store. Many of the Liberal Party’s promises are designed to put more cash into the hands of prospective buyers – so those measures will end up increasing demand (and thus prices):

  • Tax-Free First Home Savings Account
  • First-Time Home Buyer Incentive
  • First-Time Home Buyer Tax Credit
  • Reduced Mortgage Insurance Fees

Measures against home flipping (a tax), and a temporary ban on foreign buyers were designed to decrease demand, but very few experts and market watchers believe these planks will make a dent on the market.

The big question is whether supply will increase meaningfully. The government’s plan will see capital allocated to developers who are focused on building affordable housing. It remains to be seen if this will benefit the average prospective buyer. The government has had years to implement these kinds of policies, and few have remarked on tangible impacts on the market.

Other changes we’ll see that were promised are likely to have some impacts on actual house purchasing:

  • Blind bidding ban
  • Legal rights to home inspection
  • Price transparency
  • Disclosure of all parties in a transaction

We can’t say whether these measures will contribute to prices levelling off or of demand calming, but they have been called for by many for a long period of time. Blind bidding has become a hated term and has been pilloried by the press repeatedly in recent years. Having enough of a down payment or a mortgage approved is just one fight in the house buying war, bids for available homes are another. How quickly and comprehensively the federal government moves to implement these promises is a big question, let’s wait and see.

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