Loan program for 1st-time homebuyers has had few takers, little impact on market: report

A report from the B.C. Real Estate Association argues the program has not been well used nine months after launching because housing supply in B.C. remains too constrained.

1,400 have applied in 9 months, far fewer than projected

Townhouses in the Willoughby neighbourhood of Langley, B.C. A loan program for first-time home buyers was expected to receive 42,000 applications over three years — but fewer than 1,400 have signed up in nine months. (Jesse Johnston/CBC)

A program to help first-time homebuyers with their down payments has seen few takers so far and has had almost no impact on the Metro Vancouver housing market, according to a new report.

The B.C. Real Estate Association says the B.C. Home Owner Mortgage and Equity Partnership Program, a program that provides loans for down payments, paid for or approved only 1,395 home transactions in its first nine months.

When the program was launched in January 2017, the provincial government estimated 42,000 homebuyers would take advantage of it over three years.

"Our analysis indicates that the [program] 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," the report said.

The report found the program increased Metro Vancouver home prices — slightly — contributing to a rise of about half a per cent to the prices of condos and townhouses in the region.

'Proverbial drop in the bucket'

The program, announced by the B.C. Liberal government in late 2016, provides loans up to $37,500, or five per cent of the home's purchase price (up to a maximum of $750,000), to first-time homebuyers for a down payment.

Academics and the then-opposition NDP said the program could increase prices because there was not enough supply.

But Cameron Muir, a co-author of the real estate association report, said the program has had basically no effect on the market.

"You could argue that because the program was not that popular that it did not have the effect its detractors were suggesting," he said.

"It's probably the proverbial drop in the bucket and that's why the impact wasn't as significant as some suggested it would be."

In March 2017, the province said 1,000 people had applied for the program and $4.1 million in loans were issued.

Muir said given the poor uptake, it is possible the province's current NDP government could axe it, and a statement sent to CBC on Tuesday made no commitment to the program's future.

"The government of B.C. has been reviewing the B.C. Home Partnership Program to determine if it is delivering on the goals set out for it," a spokesperson wrote.

The B.C. Liberal Party was asked to comment but has yet to do so.