B.C. government assistance to homeowners could balloon to $1.2 billion in 2017
Critics say the B.C. government’s focus on homeownership will push prices higher and does nothing to help renters
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If programs remain the same in 2017, B.C. government spending to assist homeowners could jump to approximately $1.2 billion in 2017, compared to the $960 million the government spent on homeowner assistance in 2016 and $1 billion spent on social housing operations, rent assistance and capital projects in 2016.
But that focus on assisting homeowners in B.C.’s inflated real estate market could push prices higher and encourage some to take on more debt, critics have charged.
“Any time you add benefits to the act of owning a home, it makes demand for homes greater,” said Tom Davidoff, a professor of economics at the University of British Columbia.
Home prices in the Metro Vancouver market are currently dropping following B.C.’s introduction of a 15 per cent tax on foreign buyers, but are still far out of reach of local income levels.
Since February 2016, the provincial government has announced a series of tax credits and other programs intended to help homeowners, as well as a significant amount towards building new social housing. The provincial government says this amounts to significant support for affordable housing in B.C.
Homeowner assistance programs in B.C. include:
- An existing property transfer tax (PTT) exemption for first-time homebuyers for properties worth up to $475,000, at a cost of $83.6 million in 2016
- Starting in Feb. 2016, a PTT exemption for new homes worth up to $750,000, at a cost of $67.8 million a year in 2016
- Increased home price value threshold in order to qualify for homeowner grant at a cost of $821 million in 2017, up from $809 million in 2016
- A new government loan program to assist first-time homeowners cover the down payment of a home, at a cost of $703 million over three years, or $234 million per year
On the social housing side, in 2015/2016, the provincial government’s portion of BC Housing’s budget totalled $428 million. In February 2016 the government announced $355 million of new spending on building social housing over five years, with $75 million to be spent this year. Later in the year the government made a second announcement of $500 million to be spent this year on constructing more projects.
The focus on homeowners does nothing to help renters, who are also struggling with record-high increases in housing costs, said Marc Lee, an economist with the Canadian Centre for Policy Alternatives.
He has proposed taking the money currently devoted to the homeowner grant and creating a credit based on income level, similar to the Canada Child Benefit, which he said would benefit both homeowners and renters, from low-income to middle-class.
Davidoff suggested that a tax credit to non-homeowners, or cutting sales tax by a small amount for markets with high housing costs, would be more effective.
But with a provincial election coming up, help for beleaguered potential homeowners is always a good sell, noted the economists.
“It looks to me like they’re just trying to stimulate the (real estate) market, at least in the short term,” Lee said.
The Ministry of Finance supplied figures and background information for this story.