The B.C government in January came to the aid of first-time buyers who were left out of the real estate as a result of affordability by introducing a twenty five- year interest free loan. The new loan although it attract countless controversy from experts and first-time buyers alike, it had managed to attract more than 1,000 applicants in these few months.
The hot Canadian real estate market prices coupled with several federal regulations made it next to impossible for first-time buyers to enter the housing market.
However, under the government’s efforts to improve on housing affordability, many first-time buyers are taking advantage of the help offer them by the government.
For housing critics and experts the loan program added to the heat of the already hot real estate market as it increased on the demand for new homes amid a shortage of supply in leading real estate markets.
The recent Home Owner Mortgage and Equity (HOME) partnership geared towards helping first-time buyers make down payments has received over 1,008 applicants while 831 have already being approved.
According to a release form the BC Housing, which is managed by B.C Deputy Premier Rich Coleman, 270 of the approved applicants have entered into an unconditional contract of purchase and sale for a home. The loan worth of the 270 applicants amounts to $4.1 million.
Following the introduction of the program, 561 applicants were approved while in Metro Vancouver, 432 applications were either approved or preapproved.
But for real estate agent Tom Davidoff of the University of British Columbia’s Sauder School of Business any group of individuals can have massive impact on real estate prices and this is what is happening as a result of the loan program. The demand for homes has increased while supply is not keeping up the pace. Home prices have increase by 10% in the wake of the loan program adding more fuel to the burning real estate market.
And currently, Vancouver is in no need of an increased demand as policy makers are debating on measures to increase on supply.