Housing affordability has long been a major concern in Canada’s biggest cities such as Toronto and Vancouver, but it is increasingly becoming an issue right across the country.
Locally, Winnipeg was identified as a "city to watch" in a June 2017 report by Desjardins on housing affordability in Canada. And for good reason. While Winnipeg has touted itself as one of the most affordable cities in which to live in Canada, a number of recent policy decisions by the federal, provincial and local governments have made building a new house in Winnipeg less affordable for many new homebuyers.
Last fall, the federal government changed mortgage rules in an attempt to slow down rising housing prices in Vancouver and Toronto. Unfortunately for a Winnipeg homebuyer, these changes made getting a mortgage here $20,000 to $40,000 more expensive. This froze a good portion of new homebuyers, especially first-time homebuyers, out of the new home market. Additionally, the Bank of Canada just raised its key interest rate for the first time in seven years, to 0.75 per cent from 0.50 per cent. Canada’s five biggest banks, in accordance, raised their prime interest rates from 2.7 per cent to 2.95 per cent.. The overall result is that a new homebuyer’s ability to access a mortgage is more restricted than it was this time last year.
Manitoba has also claimed to have the lowest utility costs in the country as a major advantage. But with Manitoba Hydro applying for a 7.9 per cent annual rate increase each year for the next five years, home heating and energy costs could increase by 46.25 per cent from 2016 to 2021.
As well, Manitobans are still waiting to see what approach the provincial government will take in terms of implementing a carbon tax. No matter what carbon pricing option the province decides to take, the end result will be increased energy costs for homeowners. And on top of this, new restrictions on gas furnace installations in homes under construction were put in place by furnace manufacturers this past May.
These changes have increased the cost of using gas furnaces in brand new homes. Manitoba homeowners will be hit with a wave of increasing energy costs very soon.
Last, but not least, is the new impact fee introduced by the City of Winnipeg in May 2017. On an average new home, this new fee increases the construction cost to a homeowner by about $10,000 to $15,000. So just in the past nine months, the cost of building a new home in Winnipeg has increased on average between $30,000 to $55,000 as a result in changes to government policy. Affordability is taking a hit on the local level in Winnipeg to an extent not seen since the early 1990’s. Homebuilders and new homebuyers are needing governments to take steps to help ensure and protect affordability in the housing market. Lately, it seems like they have been doing just the opposite.
Lanny McInnes is president of the Manitoba Home Builders’ Association.