In federal budget, Ottawa uses Canada Post land to build housing

OTTAWA – The federal government is looking at underutilized Canada Post and National Defense properties as a way to deliver affordability and supply to the country’s housing market.

In his federal budget released Tuesday, he announced plans to free up land held by both entities to build housing at a pace and scale “not seen in generations” and help younger Canadians enter the housing market.

The objective is to create a supply of 3.87 million new homes (adding two million net new homes to the 1.87 million that the country was already on track to build) by 2031.

These numbers indicate the government believes we need to double housing construction, said Mike Moffatt, senior director of the Smart Prosperity Institute, a think tank based at the University of Ottawa.

“I’m not sure this (budget) will get us there, but it will take us very, very far,” he said.

The Canada Mortgage and Housing Corporation has said the country needs to build 3.5 million more homes by 2030 to restore affordability to levels seen in 2003 and 2004.

To close the gap between housing supply and demand, the Parliamentary Budget Officer has said the country needs to build an additional 181,000 units on average each year until 2030, leaving the nation with 3.1 million net housing units.

To reach 3.87 million homes, the plan adds new initiatives aimed at securing more land for building to previously announced measures, such as 30-year repayment periods for first-time buyers, a ban on foreign investors, a crackdown on short-term rentals and a $400 million addition to a $4 billion fund that accelerates construction.

One of the cornerstones of the plan is to free up vacant public land and lease it to developers to build housing that the party says will be “affordable forever.”

Part of that vacant public land will come from Canada Post, which has a portfolio of 1,700 post offices across the country.

The government said it is evaluating six Canada Post properties – three in Quebec, two in BC and one in Alberta – for their housing development potential and named 33 other areas where the postal service has land that could be used for construction.

The 622 National Defense properties are also a target. Sites in Halifax, Toronto and Vancouver have been identified for civilian or military uses and another 14 have been deemed surplus and ideal for housing. (To build 1,400 new housing units for military members and renovate 2,500 existing units, $6.9 million has been allocated over the next four years.)

To facilitate the ability to make use of public lands, the budget proposes spending $5 million over three years on an overhaul of Canada Lands Co., the Crown corporation that manages federal properties.

The Liberals imagine the reform could make it possible to transfer land from the federal government to Canada Lands for $1 whenever possible, cut approval times in half, bundle multiple properties for transfer at once, and offer long-term leases and low cost for housing providers. .

The government reasons that more land freed up for construction will help reduce housing costs for average Canadians, who want them to spend no more than 30 per cent of their income on housing.

On Tuesday, Ratehub.ca estimated that the minimum annual income required to buy an average home in some of Canada’s major cities reached $1.1 million in Toronto and Vancouver in March, when CREA found that the average price of a House sold was $698,530.

That figure is projected to rise 4.9 percent annually to $710,468, more than double the increase the national housing group had forecast in early 2024.

That pace means homes remain “out of reach” for many first-time buyers, the budget concludes. Meanwhile, renters are also finding it difficult to keep up with costs.

The budget said average rent rose 8.2 per cent year-on-year in February, its fastest pace since the early 1980s.

To lower prices, the government will try to build more rental housing for middle-income Canadians by launching Canada Builds.

The new initiative is based on partnering with provinces and territories to take advantage of $55 billion from the current Apartment Construction Loan Program, which provides low-interest, repayable loans to developers and municipalities.

To access federal funding under the program, provinces and territories will have to demonstrate that they are building on government, non-profit and vacant land, reducing development approval times and considering access to child care in the development process.

Canada Builds is modeled after a similar program in BC

Aside from the supply, the budget was also peppered with rhetoric about investors profiting from real estate. At least six times in the 416-page budget, the Liberals said: “Houses are for Canadians to live in, not speculative assets for investors.”

It was an allusion to investors, who, according to Bank of Canada estimates, have snapped up a third of home purchases between 2014 and 2022.

“Many Canadians have the belief that it doesn’t really matter what is done on the supply side because those houses will simply be bought by investors and speculators,” Moffatt said.

“I think they needed to address that concern.”

This report by The Canadian Press was first published April 16, 2024.