In a pitch aimed at millennial voters in key ridings, Liberal Leader Justin Trudeau is promising more help for first-time homebuyers living in high-priced markets such as the greater Toronto and Vancouver areas.
The Liberals are pledging to expand the First Time Home Buyer Incentive program that was brought in with this year's budget. The program is available to first-time homebuyers who earn less than $120,000 a year, but under the expanded program those with incomes up to $150,000 will qualify.
Under the program, the Canada Mortgage and Housing Corporation (CMHC) kicks in up to 10 per cent of the purchase price of the home, as long as the borrower comes up with the minimum amount for an insured mortgage, which is now set at five per cent.
Under the current terms of the program, a buyer qualifies for assistance only if the total value of the mortgage, plus the CMHC's portion, does not exceed $480,000. Trudeau announced today that ceiling will increase to $750,000 for certain hot markets such as Victoria, Vancouver and the Greater Toronto Area.
"Young people hoping to buy a first home, as their parents did a generation ago, are facing a tough housing market," Trudeau said during a campaign event in Victoria.
The March budget earmarked $1.25 billion over three years for the new mortgage plan. Trudeau noted that the Conservatives voted against the measure.
One of the main criticisms of the budget measure was that the cap was too low to help prospective homebuyers in markets where prices have exploded. Trudeau said the new pledge acknowledges there needs to be "extra help" for those in cities where housing prices are significantly higher than the national average.
Conservative Party spokesman Simon Jefferies said the Liberal housing policy likely won't work.
"Justin Trudeau has never been able to quantify the number of Canadians who will actually benefit from the First-Time Home Buyers Incentive and he still can't," Jefferies said.
He added that Conservative Leader Andrew Scheer will offer his own plan to make home ownership more affordable.
Trudeau also said a re-elected Liberal government would take steps to address housing speculation by foreign buyers that is driving up housing prices — including what Trudeau called a "modest" 1 per cent national speculation and vacancy tax to be levied on non-resident, non-Canadian homeowners.
Modelled after B.C.
The tax is based on one in place at the provincial level in B.C. Trudeau said the national tax is meant to ensure foreign capital pushed out of B.C.'s housing market doesn't drive up housing costs in other parts of the country.
"That is why it's important to create a national measure right across the country, based on B.C.'s success with it, to ensure that foreign speculation doesn't make housing less affordable for Canadians," he said.
The Canadian Real Estate Association (CREA) welcomed the announcement, saying it will give "tangible support" to millennials and other first-time buyers in cities with overheated markets.
"The extension of eligibility requirements is great news that will allow Canadians in Canada's highest priced markets (to) take advantage of the program and start building their lives in a home of their own," CREA president Jason Stephen said in a statement.
The initial budgeted program kicked in this month. The expanded program would begin in November.