New construction is ramping up in London as the government pledges new funding for purpose-built rental units
There’s no way around it, we’re in an affordability crisis in the Canadian housing market and despite some calls for the bubble to burst, things haven’t been getting any better for those waiting on the sidelines.
Recommended reading: The Canadian housing market isn’t a bubble
While the demand side of the equation doesn’t seem to be going down anytime soon, especially with the Bank of Canada pausing rate hikes for the time being, both the provincial and the federal government seem to be trying to increase the supply of housing.
Over the past 2 weeks the federal government has announced a number of new measures to help municipalities add supply to the housing market in an effort to improve affordability including a new housing fund for London, Ontario. Whether these actions will have any meaningful impact on the price of housing in the short term remains to be seen.
Let’s take a look at how this new fund could impact the housing market in London.
The Trudeau government announces new funding for Canada’s largest cities
On Wednesday September 13, 2023 the federal government announced a new plan to tackle the housing affordability crisis in London. This funding is a part of the new Housing Accelerator fund and will provide $74 million to London, Ontario for the purpose of new builds. Alongside this new funding comes new zoning which will allow the construction of up to four housing units on a single property in low-density neighborhoods.
Denser housing is on the way for London
London is home to one of the province’s largest universities, Western University, which contributes an annual supply of students both domestic and international that fuel the demand for housing. With record numbers of international students coming to Canada, University towns are being hit the hardest when it comes to affordability. Denser housing in the form of multi-unit properties allows builders to add new supply faster than single-family homes.
The new Housing Accelerator Fund is projected to add an additional 2,000 units to London.
The question remains: will it be enough to impact the price of housing?
Will it make a dent in the price of homes?
Despite the efforts of provincial, municipal, and federal governments to create new supply faster than the rate of demand to increase affordability, analysts aren’t painting the picture that home prices are likely to drop any time soon. According to a recent report by TD Bank, “housing supply will struggle to keep pace with Canada’s rapidly expanding population” and “a meaningful improvement in affordability will likely remain elusive.”
With that being said, 2,000 new units in the absence of an even faster increase in demand should mean good things for affordability.
It remains to be seen if the current plan of providing funds and subsidies for new supply will have a meaningful impact on the price of housing in Canada, or whether these measures are simply a way to appease voters, while not angering existing homeowners.
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