The federal budget released Tuesday included several sweeteners for first-time homebuyers, who will be welcomed by those looking to get a foothold on the real estate ladder as affordability continues to slide across the country.
The UDIA particularly welcomed the federal government’s decision to introduce a $50,000 annual allowance under its expanded Housing Guarantee Program and the newly created Regional Housing Guarantee.
These programs are intended to help homebuyers buy a new home by reducing lenders’ mortgage insurance requirements, which typically must be paid if a deposit is less than 20%.
Under the updated initiative, there will be three housing guarantee schemes.
The Première Habitation Guarantee will provide 35,000 guarantees each year (compared to 10,000 currently) from July 1, 2022
The First-Time Home Guarantee allows a portion of a first-time buyer’s qualifying home loan from a participating lender to be guaranteed by the National Housing Finance and Investment Corporation. This means first-time home buyers can buy a new home with as little as 5% down.
Secondly, the new Garantie Habitation Régionale will provide 10,000 guarantees each year from October 1, 2022 to June 30, 2025. This will aim to help first-time buyers, including non-first-time buyers and permanent residents, to buy or building a new home in an area. subject to the passage of enabling legislation.
Finally, the Family Home Guarantee has also been extended, with 5,000 guarantees each year from July 1, 2022 to June 30, 2025. This will support single-parent families with children in the purchase of their first home or in re-entering the housing market. housing with a deposit of as little as two percent.
While the UDIA strongly supports moves to get more people into their own safe homes, it will be critical for governments to work together to ensure housing supply issues are addressed at the same time.
The new programs will undoubtedly drive demand, which will also be driven by expected population growth in the coming years as we emerge from COVID-19 restrictions.
At the national and state levels, the UDIA is calling for streamlined planning approvals and the provision of enabling infrastructure – water, sewer, electricity and roads – to ensure new housing is built to meet growing demand.
Without enough land ready for development, initiatives such as housing guarantee programs will unfortunately fail.
NHFIC data shows that it can take up to six years for new supply to hit the market, and this problem will only get worse if significant reforms are not implemented now.