Liberals target first-time buyers in pricey housing markets

The federal Liberals say that if they’re re-elected in October, they’ll sweeten a deal for first-time homebuyers in some of Canada’s priciest markets.

In the March federal budget, the Liberals unveiled a first-time homebuyer incentive designed to help households that make less than $120,000 buy their first home with the help of a shared equity mortgage with the Canada Mortgage and Housing Corporation (CMHC).

Homebuyers need only a 5% down payment to qualify for the program, which launched Sept. 2. The CMHC would provide up to 10% in shared equity (which the homebuyer would have to repay), and the program limits the incentive amount to four times the household’s annual income.

The incentive applies only to mortgages of no more than $480,000, including the CMHC’s portion. That meant households in Canada’s hottest markets — where average house prices hover around $1 million — wouldn’t qualify unless they had a down payment substantial enough to bring the value of the mortgage below $480,000.

On Thursday, the Liberals said that, if elected, they would allow mortgages (including the CMHC’s portion) of up to $750,000 in Vancouver, Toronto and Victoria to qualify for the incentive. They also said they would raise the household income cap to $150,000 for first-time buyers in these markets.

The Liberals also acknowledged that housing speculation by foreign owners has driven up the cost of homes across the country.

In a release, the party pledged to address this by “putting in place a consistent national speculation and vacancy tax for non-resident, non-Canadians.” Canadians who live abroad, as well as non-Canadians who live in Canada, would not be affected, the party said.