Canada is moving ahead with a “rent-to-own” housing program, Prime Minister Justin Trudeau said on Tuesday, as he set out C$2 billion ($1.53 billion) worth of spending toward a previously announced plan to double homebuilding over the next decade.
The funding, earmarked in previous budgets, would go toward creating some 17,000 new homes across the country, including more rapid housing for the homeless or those at risk of becoming homeless, along with affordable and market-rate housing projects.
The program would also help housing providers develop and pilot a new rent-to-own model, aimed at creating a path for Canadians transition from renting to buying their first home, Trudeau said at a news conference in Kitchener, Ontario.
“For a lot of renters, saving to buy a home is increasingly difficult. Through this new program we’ll work with housing providers to help families go from renting to owning their home,” the Canadian leader said.
Canada’s home prices surged more than 50% during the COVID-19 pandemic, buoyed by rock-bottom interest rates and booming demand. But recent sharp increases in interest rates by the Bank of Canada, which is aiming to curb high inflation, have cast a chill on the housing market.
Although home prices are softening, higher mortgage qualifying rates are keeping some would-be-buyers out of the market.
“Tackling housing affordability is a complex problem … simplistic solutions are simply not going to solve the problem,” Trudeau said.
Canada’s national housing agency has said the country needs to build millions of new homes by 2030 to restore affordability, and Trudeau’s Liberal government has pledged to double the pace of homebuilding over the next decade.
But achieving an affordable housing market may prove difficult, as home construction is already at a multi-year high and the construction industry faces a dire shortage of skilled workers.
($1 = 1.3082 Canadian dollars)