Real Estate

Canada targets home-buying millennials with equity plan

Housing in Canada/Bloomberg

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According to federal budget, Canada Mortgage and Housing Corporation will provide up to 10 per cent funding for new homes and five per cent for existing homes to reduce mortgage costs for low- to middle-income buyers.

Wednesday 20, March 2019

(Bloomberg) --Canada’s housing agency will spend up to CAD 1.25 billion ($943 million) over three years to take equity positions in homes bought by first-time buyers, part of a plan by Justin Trudeau’s government to make housing more affordable for the youngest voters.

The financing will apply to insured mortgages, which are required if the buyer puts less than a 20 per cent down payment on the property.

Finance Minister Bill Morneau is seeking to ease affordability concerns after price gains and rule changes in recent years pushed home ownership out of reach for many Canadians, in particular millennials who may be just starting out in the labour market.

Though prices and sales slumped in most cities in 2018, prices are still up 64 per cent in Vancouver over the past five years, topping CAD 1 million on average, and up 56 per cent in Toronto over the same period, Canadian Real Estate Association data show.

This new programme -- which the government expects to be used by 100,000 home-buyers over three years -- may provide a shot in the arm to a market that has been a vital contributor to growth amid signs the Canadian economy is slowing.

“Sales should be boosted by this, so should prices,’’ said Brian DePratto, an economist at Toronto-Dominion Bank. “At the margin, there is more upside to demand.’’

 

TAGS : Canada budget, Canadian Real Estate Association, Canada Mortgage and Housing Corporation, Justin Trudeau

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