A UBC Economist is calling the Premier Christ Clark’s housing announcement “counter-productive.”
UBC Professor Joshua Gottlieb says the plan to help first-time home buyers enter the market is only going to make matters worse by pinning buyers against each other.
“If you have more people who can afford a home, or if you push people who can afford a $500,000-home to instead go for a $600,000 or $700,000 home, that increases the demand, that increases the number of people who are bidding on any property.”
Gottlieb calls the plan a “superficial remedy.”
He says it doesn’t address the real issue, which is a shortage of supply.
Minister defends initiative
The Minister Responsible for Housing was asked about the new program.
Speaking to Mike Smyth on the Simi Sara Show, Rich Coleman downplayed any notion the program will increase demand but do nothing about supply.
“All it does is allow people to get into the front end of the market and what it will do is there’s going to be some supply added that’ll be added to the marketplace which will be great because if we can get more supply that means I can also pick up some other rental product.”
When told the initiative would be increasing demand by giving people “free money” for five years, Coleman said “… it won’t necessarily if people get on with building.”
At the press conference, Premier Christy Clark accused municipal governments of needing to step up on housing supply, saying “some cities are doing a good job, some not so much.”
Meanwhile, B.C. Director Jordan Bateman with the Canadian Taxpayers Federation is calling the new initiative “disappointing.”
“So this money will be taken from taxpayers 25 years from now I guess we’ll see if everyone has paid it back no one really knows what the mechanism is if people haven’t paid it back.”
Bateman says what the B-C government should have done was forced cities to cut red tape around housing and get more supply onto the market.
Broker Angela Calla with Dominion Lending says there are pros to the plan, one is interest savings.
“If you look at examples of a home valued at $750 thousand, this requires a minimum down payment presently of $50 thousand dollars and with contributions from this program, a first-time homebuyer can now put down $90 thousand dollars, instead of the original $50 thousand.”
And one con?
Calla says potential buyers will be running the risk of not knowing the interest rate when it’s time to pay back the loan.
With files from Emily Lazatin, Janet Brown and Matt Lee