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Editorial: Housing appears on Ottawa’s radar

Unlike most of their counterparts in Metro Vancouver, first-time home buyers on the Sunshine Coast could stand to benefit from the federal government’s shared-equity mortgage plan unveiled in this week’s budget.

Unlike most of their counterparts in Metro Vancouver, first-time home buyers on the Sunshine Coast could stand to benefit from the federal government’s shared-equity mortgage plan unveiled in this week’s budget.

The new program – arguably the highlight of the Liberals’ big-spending, high-deficit, pre-election budget – will be available only to first-time home buyers with annual household incomes of less than $120,000. On top of the buyer’s minimum five per cent down payment, Canada Mortgage and Housing (CMHC) would provide an interest-free loan to cover 10 per cent of the purchase price of a new home or five per cent of a resale. The idea is to make monthly mortgage payments more affordable. The loan would have to be paid back when the home is eventually sold.

The program will have little impact on overpriced real estate markets in Canada’s major cities because it maxes out at four times the applicant’s annual income, so that the value of the mortgage plus the CMHC loan would be capped at $480,000. Homes in the $500,000 range or under are a rarity in Metro Vancouver, but they are relatively commonplace on the Sunshine Coast, where the composite residential benchmark price in February was $608,800 and the median selling price for a detached single-family home was $582,000.

While only a limited number of households on the Coast will be in a position to take advantage of the program, it’s quite likely to attract larger numbers from the city, where prospective first-time buyers will be casting far and wide for eligible new condo and detached entry-level properties to invest in. We’ll know fairly soon because CMHC will start accepting applications this fall.

The $1.25-billion program is expected to help about 100,000 Canadians over the next three years. Another program announced in this week’s budget will give first-time home buyers greater access to their RRSP savings by increasing the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000. 

Another initiative, intended to boost the supply of rentals in tight markets like Vancouver and Toronto, will make an additional $10 billion in financing available over nine years to help build a total of 42,500 new units.

There were other housing-related measures announced as well, including a pledge to take action “to improve the government’s compliance and enforcement framework for anti-money laundering and taxation.”

The federal Liberals would argue that addressing the country’s serious housing needs has been a priority for their government from day one. The fact is, however, that it’s taken an election year for them to start acting like they plan to do something about it.

– John Gleeson