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OTTAWA — Housing Minister Sean Fraser announced the launch of a $1.5-billion co-operative housing development program that the federal government promised in its 2022 budget.
Fraser was in Winnipeg on Thursday to announce the program, which Liberals touted as the largest federal investment in co-op housing in 30 years.
The program is expected to build thousands of new homes by 2028, though the exact number will depend on where those homes are built.
“The real reason that we want to invest in co-operative housing is not only so we can create a lower cost of rent today, but that affordability will be preserved for the long-term when profit is not entered into the equation,” Fraser said in an interview with The Canadian Press.
Co-op housing is managed by residents with no outside landlord and typically operates on a break-even basis.
The federal government said the program was co-designed with the Co-operative Housing Federation of Canada — which represents more than 900 co-ops across the country — as well as other leaders in the sector.
The program is one element of a plan released this spring outlining the federal government’s plans to tackle housing affordability.
Prime Minister Justin Trudeau’s government has been trying to reinvigorate younger voters by addressing key economic issues, such as housing, which polling suggests are causing many of them to turn away from the Liberals.
Fraser said the program will prioritize funding for projects that help women and Indigenous communities.
“Canada used to have a much healthier proportion of its housing stock exist outside of the market,” the minister said, noting the lack of investment in non-market housing by both Conservative and Liberal governments over the last few decades.
“My view is that Canada needs a much healthier housing mix if we’re going to reflect the needs of the Canadian population.”
According to data from the Organization for Economic Co-operation and Development, only four per cent of Canada’s housing stock was made up of social rental housing in 2020.
In comparison, the OECD average was seven per cent.
The federal government says co-op providers will be able to apply for the first round of funding between July 15 and Sept. 15.
The program, which will offer $1 billion in loans and $500 million in grants, will be administered by the Canada Mortgage and Housing Corp.
Fraser’s announcement comes one day after the Bank of Canada lowered its key interest rate by a quarter of a percentage point, marking the first rate cut in four years.
High interest rates have weighed on many mortgage holders as their interest payments have increased. Many housing developers have also had to pause projects to due higher financing costs.
Fraser said that as interest rates continue to fall, it will both reduce the cost of building and the cost of borrowing for mortgage holders.
“I don’t want to suggest that 25 basis points is suddenly going to cure the housing crisis,” Fraser said.
“But it’s very clear with the Bank of Canada’s decision that we have turned an important corner and are moving in the right direction, despite the fact that we have significant work to do in the months ahead.”
This report by The Canadian Press was first published June 6, 2024.
Nojoud Al Mallees, The Canadian Press
