It is well known that in Canada, we are facing a shortage of affordable dwellings, whether they be ownership or rental. In addition, much of our rental stock is comprised of homeowners who lease their houses or condominiums for whatever reason.

Purpose-built rental accommodations are few and far between these days as well.

We need more of everything.

In late June, Missing Middle Initiative, which addresses the challenges facing young urban Canadians looking to join the middle class, published a report entitled Boosting Demand for New Homes is Supply-Side Policy.

This report is fascinating, as it shines a different light on supply and demand. 

On one hand, we need enough supply to handle demand – but remember that there is no new supply without demand. In other words, we here in Canada need policies that will increase supply, while keeping demand in perspective.

Higher housing demand should mean higher supply

Many people think the recent federal step to cut the GST for certain new home buyers will simply boost demand and cause inflation, the opposite of which is true. In the case of the GST break, the boost in demand works to spur supply.

Keep in mind that resale home sales satisfy demand without increasing supply, which translates to higher prices. New homes, on the other hand, serve to increase supply.

Right now, the tax and regulatory systems in Canada favour existing homes. In fact, we desperately need solutions that increase the supply of new homes.

GST reform is an example. Currently, buying a new home in Ontario brings with it costs such as numerous taxes, development charges, land transfer taxes, etc. – costs not added on to existing homes.

Yes, the original purchasers of today’s resale homes paid items such as development charges, but those charges were a fraction of what they are today. This cannot continue if we are to boost new home sales.

Overcoming barriers to home buying

Why not offer more incentives to Canadians to purchase new homes specifically? One suggestion is to offer creative down payment assistance programs for those who choose to purchase new.

Another barrier to increasing housing supply in Canada is the foreign-buyer ban, which applies to both new and resale homes. This step essentially eliminated trillions of dollars in capital investment needed to boost housing supply.

We also need new supply when it comes to rental accommodations. The government can help greatly here with changes to tax policies that will make it more profitable to build new rental buildings. 

Time is of the essence here. We need creative thinkers in government and the private sector to come up with ways to increase housing supply across the board.

Provincial and federal governments have set hard-hitting supply targets, but we have seen a major decline in housing sales, especially in Toronto.

For new home builders and developers, the writing has been on the wall for years about barriers to new construction. Supply may be staggering behind demand, but without demand, there will be no new supply.

The benefits of buying a new home

The bottom line is that we need more buyers to turn to new construction houses and condominiums. The many benefits of buying a new home over a resale one include peace of mind from a new home warranty.

So often, resale homes involve a lot of expensive repairs and refurbishing after moving in. The seven-year warranty on new houses and condos takes effect when the owner takes possession and covers major structural defects.

Under the program in Ontario, there are four main types of warranty coverage during this period including:

• deposit protection;
• delayed closing/occupancy coverage;
• condominium cancellations; and
• financial loss coverage for contract houses.

All of these are desirable in what will likely be one of the largest financial investments of your life.

In addition, with the Ontario Building Code being updated regularly, you know your new house or condo is built with the most advanced technologies and materials. This is critical to the value and longevity of your purchase.

And if you decide on a new condo, remember that you and/or your tenants will have elegant amenities under your roof such as fitness facilities, theatres, entertainment spaces, rooftop terraces, etc. With new construction residences at varying stages of finishing, you also have a wide parameter when it comes to selecting a move-in date. 

Aesthetically speaking, our new houses and condos today come with incredible standard features, many of which used to be considered upgrades.

And oh, the upgrades! New houses and condos will be beautiful, regardless of the buyer’s budget. They or their tenants will also be the first to live in those surroundings, which means a fresh, clean start.

Plus, if you purchase early enough in the selling process, you will get to choose those standards and upgrades to make the most of personalizing the surroundings to appeal to the widest demographic.   

Whether end-users or investors, new homes are desirable for both buyers and the economy.