Oct 18, 2005 - Government policies can make or break housing market (Jobs in Jeopardy report)

October 17, 2005

Government policies can make or break housing market

The full Jobs in Jeopardy report can be found by clicking here

TORONTO - New home buyers suffer when federal, provincial and municipal government policies add to the price of a new home in the Greater Toronto Area, but so do the three levels of government says Jobs in Jeopardy: Government Could Stall the Housing Engine, a new study released by the Greater Toronto Home Builders' Association today.

"It's quite clear from this study, that government policies that drive up the cost of new homes can impact home buyers and the economy as much as higher mortgage rates. When the threats are combined, the consequences can be devastating," says Julie Di Lorenzo, president of the GTHBA.

The Jobs in Jeopardy study, prepared for the GTHBA by housing economist Will Dunning, highlights the consequences of government-driven housing price increases which include reduced housing starts, lost jobs and lower tax revenues for all levels of government.   

Dunning predicts that for every $1,000 added to the cost of a new home as a result of increased government taxation and/or regulation, there will be:

- 284 fewer housing starts;
- 1,015 fewer jobs;
- $20.6 million less in government revenue; and
- a $2.2 million annual reduction in future realty taxes.

The study looks at various scenarios of government-driven or rate-driven price increases in isolation and in combination. For example, a $10,000 policy-driven increase in house prices combined with just a half percentage point increase in mortgage rates would reduce housing construction by more than 20,000 units over four years, result in more than 66,000 lost jobs and cost governments more than $1 billion in lost revenue.

"Home building represents 5.6 per cent of provincial GDP and contributes billions in tax revenue which goes to fund important government priorities such as health care and education. We urge the province and every level of government not to shoot themselves in the foot by taking the massive economic contribution made by the housing industry for granted," said Di Lorenzo.

With more than 1,300 members, the GTHBA is the voice of the residential construction industry in the Greater Toronto Area. Established in 1921, the association is comprised of land developers, home builders, professional renovation contractors, subcontractors, suppliers, service, professional and financial firms. We are proudly affiliated with the Ontario and Canadian Home Builders' Associations'.

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The full report can be found by clicking hereFor further information:

Suzanna Cohen 
Director of Communications
416-391-3450
scohen@gthba.ca

Stephen Dupuis
Executive Vice President
416-391-3453
sdupuis@gthba.ca