With the economic slowdown internationally many countries as well as Canada have special policies to help with this. The Economic Action Plan is the name of these special policies in Canada. With 90% of the resources of the fiscal year 2009-2010 being implemented, it is time to have a closer look at it, spotlighting on the Canadian housing sector.
The Canadian economy is being supported with fiscal stimulus by the projects within the Economic Action Plan. The Gross Domestic Income (GDI/GDP) in Canada is at over 4%, due to the stimulus package, higher than the USA and one of the largest worldwide.
Ways to reduce Canada's Tax Burden
Possibly the most substantial part of the Plan is tax cutting. The tax lowering lures related to the property market are: - Home improvement tax credit: $2.5 billion (for the year 2009-2010). - Increase in Home Buyers’ Plan withdrawal limitation: $15 million. - $175 million allocated for First-time Real Estate Buyers' Tax Credit.
Millions of Canadians have profited from these tax reduction lures already. Since earlier in the year, whilst not the most conspicuous, the First-time House Buyer's Tax Credit helped energize a very quick property rebound all over Canada. Real Estate owners making use of the property renovation credit have noticed their positions strengthened when coming to sell their homes, along with a rise in the market value of the property.
Provoke housing development
In spite of the fact that some realtors specializing in resale real estate are not too inspired about new construction, in the long term it is definitely crucial for a healthy real estate environment and also for real estate agents themselves. Including the tax relief mentioned already to boost and encourage the construction industry and private property ownership, direct spending on construction has further added encouragement which benefits the whole economy.
The action plan has watched over 4,000 projects in the property market begin with a further 3,000 planned. These also involve around 300 social housing projects, which have funds of about $1.025 billion in the fiscal year 2009-2010.
There is nearly $10 billion budgeted for this area alone. Realtors are finding these moves interesting due to the property market impact. In one of our recent articles MoveOntario2020 we talked about the details on how infrastructure projects alter values of properties in their vicinity. Social housing broadens the supply of homes and alters both the resale and rental market, introducing more affordable housing for low income social groups.
The closeness of projects is something that some realtors find vital, when their business is directly affected by these sort of neighbourhoods. However, there is also more international impact on the labor market – construction projects support thousands of jobs and improve the financial situation of the workers, thus raising their ability to finance their own homes.
How effective is this action plan?
Canada's economy has seen the property market become it's driving force, hence it being one of the first areas that have seen a rebound in the current downturn. The monetary policy has been one of the driving forces behind the upward turn of the housing market so state realtors. Still, fiscal boosts plays its own part. Although the plan is very steep we can say it has a positive effect on the real estate sector and we know that a flourishing real estate market is an implication of a healthy national economy.