Trudeau’s Liberal government is scrambling to regain slipping support, making bold, even shocking moves to win back voters.
We talked about his recent surprising decision to sharp-cut immigration.
The Liberals are in crisis mode with recent polls showing a shaky 23.2%, while the Conservatives have a commanding 42% lead.
Conservative Leader Pierre Poilevre is seizing the momentum with a bold new housing proposal in his campaign to win over Canadians.
What is he proposing and how is this big change going to impact the market?
Currently, Trudeau’s government is spending big bucks to tackle our housing supply issues.
The $4 billion Housing Accelerator Fund aims to add 100,000 new units by rewarding municipalities that streamline their housing approval processes.
The $6 billion Housing Infrastructure Fund supports critical infrastructure like water and transit systems to enable housing developments across Canada.
But Poilievre argues that these funds are trapped in complicated processes and are failing to deliver the rapid change we need for our housing market.
So he’s proposing something simple and direct.
Eliminate the 5% GST on new homes priced under $1 million.
For a $700,000 home, GST would be $35,000, which is a significant amount.
When you buy a new home from a developer, the GST is already included in the purchase price.
In Ontario, we have the 13% HST, which is made up of 8% PST and 5% GST.
If the proposal comes into effect, then developers would only need to pay 8% tax instead of 13%, for homes under $1 million.
In today’s market, there is a 20 to 30% price gap between pre-construction and resale units.
Yet, developers are struggling to lower prices because of the ever increasing construction costs.
If they lower prices to attract more sales, they run the risk of losing money, so they’d rather cancel the project or just wait till the market gets better.
That’s why most developers have been stalling for the past 12 months.
And they will probably continue to stall for another 8 to 12 months.
The 5% GST cut, if materialized, will give developers some breathing space to lower prices.
This could potentially boost pre-construction home sales for units under a million dollars.
Developers will be encouraged to create more homes within this price range and start building again, which would lead to more housing supply in the longer term.
That’s the theory behind Poilievre’s tax cut proposal.
Of course, the proposal gained a lot of support from home builders and real estate associations.
You see, the Liberals and the Conservatives are taking very different approaches to solve our housing issues.
The Liberals prioritize government-led funding, infrastructure support and rental incentives.
They rely heavily on provincial governments on execution.
On the other hand, the Conservatives favour a hands-off, market-oriented approach by removing taxes and simplifying rules, regulations and complicated procedures.
They aim to provide immediate relief through lower home prices and direct incentives for new homes.
Government intervention and funding versus direct tax cuts and a market-driven approach.
Which one do you think is more effective?
Comment below and let me know.
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