Buying a home has become a steep financial challenge for Canadians, especially those entering the real estate market for the first time. It’s an issue governments and associations have pledged to investigate – and now the British Columbia government is moving ahead with the most drastic measure so far, offering to lend first time buyers up to $37,500 for their home down payments.
The loans will be offered under the B.C. Home Owner Mortgage and Equity Partnership Program, which will take effect January 16, 2017. They will be amortized over 25 years and will be interest and payment-free for the first five years, as long as the home remains a principal residence. After that period, buyers will start making payments at current interest rates.
To be eligible, buyers must have been a Canadian resident for at least five years, a B.C. resident for at least one year, and can qualify for a high-ratio mortgage. The loan can be used on homes priced up to a maximum of $750,000.
B.C. Premier Christy Clark said it’s an important step to preserving affordability for local middle class buyers. “The dream of home ownership must remain in the grasp of the middle class here in British Columbia,” she stated to reporters. The province estimates 42,000 new home buyers will take advantage of the new program.
The move has been applauded by the British Columbia Real Estate Association, which has championed for homebuyer affordability in the province. “The introduction of this program will address the affordability gaps that, as a REALTOR®, I hear about every day,” said BCREA President Deanna Horn. “We thank Premier Clark and Minister Coleman for introducing this valuable program to assist first time home buyers in entering the marketplace.“
The Latest in B.C. Housing Crackdown
It has been a tumultuous year for British Columbia real estate, with several dramatic measures introduced to help improve affordability and reduce foreign investment speculation. Most infamously, a 15% tax was introduced in August for those buying property from outside of Canada in the Metro Vancouver area.
Related Read: Foreign Investment in Canadian Real Estate – How Bad Is It?
Home sales have plunged in the province in the months following – 20.1% in November, year over year – especially in the luxury market. The downturn has also prompted the Canadian Real Estate Association to downward revise its sales forecast for B.C., predicting sales and prices will continue to soften into 2017.
A tax on homes standing empty proposed in June by Vancouver mayor Gregor Robertson was also passed in October, and will tax 1% of a home’s value should it not be occupied.
“Vancouver housing is first and foremost for homes, not a commodity to make money with,” he said. “We need a tax on empty homes to encourage the best use of all our housing, and help boost our rental supply at a time when there’s almost no vacancy and a real crunch on affordability.” It’s anticipated it could return 1,500 to 4,200 units back to the rental market, and improve the rental vacancy rate from 0.6% to 3.5%.
