The B.C. Real Estate Association (BCREA) has released a report about the impact of loans by the B.C. government to first-time home buyers.
According to the report Tuesday (February 13), the program helped many new purchasers, but did not cause a huge increase in home prices in Metro Vancouver.
The report noted that B.C. Home Owner Mortgage and Equity Partnership program was “not a significant driver of price appreciation in the Metro Vancouver housing market”.
The report indicated that the home purchases enabled by the program, which the association refers to as the HPP, contributed half a percent increase in home prices.
For apartment or condo units, the program accounted for a 0.55 percent increase in prices in the first three quarters of 2017.
For townhouses, the price increase attributed to the program was 0.57 percent.
“Our analysis indicates that the HPP was helpful to many homebuyers, but not popular enough to cause a significant impact on market conditions, given the program timing coincided with already constrained supply conditions,” according to BCREA report.
The program was introduced by the then B.C. Liberal government on December 15, 2016.
The program was designed to help first-time home buyers by providing a loan of up to $37,500 or five percent of the price.
The loan is payable over a period of 25 years, and is interest- and payment-free for the first five years.
According to a government media release about the program, the province will invest about $703 million to help around 42,000 households enter the market over the next three years.
When the loan program was announced by the government of then B.C. Liberal Premier Christy Clark, critics claimed it would prices to spike up.
The BCREA report noted that the program facilitated 1,395 transactions as of September 2017, or 1.7 percent of all home sales in the province.
Around a third of the deals were in Metro Vancouver, and 96 percent of these were for condos and townhouses.