Many first-time homebuyers say they can't access B.C.'s tax-exemption benefit

Gabriel Haney is looking to buy a one-bedroom apartment in Langley or Burnaby.

The 26-year-old from Langley says hehopes to take advantage of B.C.'sFirst Time Home Buyers' Program, an incentive that exempts people who arebuying their first home from paying property transfer tax, which ranges between one to three per cent of the home's cost provided the property ispurchased for $500,000 or less.

"I rely on this grant to be able to afford a home," said Haney, a high school teacher.

But even though Haney's budget is around that figure, he says he is struggling to find a home that meets the $500,000 maximum purchase price criteria.

"A lot of properties are listed at $499,000 ...you have to bid above $500,000if you want to even be considered," Haney said.

He recalls one home he had recently bid on, which received 30 other offers.

"Even if I wanted to take advantage of [the program], I can't because I can't compete with the other people who are bidding above [the price limit]."

'There isn't any property ... that would qualify'

Metro Vancouver mortgage broker Jerry Jackman, who has worked in the business for over 20 years, says he cannot recall any client who has recently accessed the incentive.

"It's ludicrous to suggest that this is a benefit to first-time buyers when there isn't any property that they can buy that would qualify them to get the rebate," he said.

Jackman, who co-owns Think Mortgages with his son, sayseven outside of Metro Vancouver, properties under $500,000 are difficult to come by.

"It's really not a benefit when there's nothing to buy."

Buyers outside the Lower Mainland are also struggling to find houses under theprice threshold.

Michael Huber, 42, and his wife Elsa are in the process of buying their first home in Port Albernion Vancouver Island for $600,000 meaning they do not qualifyfor the tax exemption.

"I think that all first-time homebuyers should have the opportunity to have that tax waived ... why not give those folks a break?" said Huber.

Huber, who is originally from Surrey, saysaffordability was part of the reason they decided to move to Port Alberni. Theprice cap, he says, is "completely unrealistic" in B.C.'s market today.

"They need to give their heads a shake or at least just come back to the table and do the math, because it's not fair."

B.C.'s Ministry of Finance says 14,664 homeowners used the program in 2021, making up 8.6 per cent of all170,377 home sales that year.

"Making homes more affordable for people and families is a priority for this government, and this is only one of several programs available to support people with moving into home ownership," the ministry said in an email statement.

Keeping up with inflation

The First Time Home Buyers' tax exemption was first introduced by the provincial government in 1994. The maximum house pricehas been raised several times since.

Since 2014, the limit has been raised once, from $475,000 to $500,000 in 2017, representing a 5.2 per cent increase.

Comparatively, average residential home prices in the province have increased by 63.2 per cent in this time frame, from $568,405 in 2014 to $927,877 in 2021, according to the British ColumbiaReal Estate Association (BCREA).

Brendon Ogmundson, chief economist with the BCREA, saysthe limit has not kept up with home prices, partially due to a large price jump over the last two years.

"If you don't at least index to inflation with these thresholds they're just going to become less relevant," he said.

Ogmundson saysthose hoping to buy a home for under $500,000 in the province are limited to certain regions: median property prices fall below this amount in the Cariboo region, in Northern B.C., and in the Kootenays, excluding major cities. Some parts of the Fraser Valley have a median apartment price under $500,000, he adds.

"If you're looking in Victoria or Vancouver it's going to be really, really difficult."

The Ministry of Finance said the government reviews and considers changes of provincial taxes each year, but that it is too early to talk about changes in the 2023 budget.

More needed to make housing affordable

Thomas Davidoff, a finance professor at the University of British Columbiawho specializes in real estate, sayswhile expanding this incentive will help some to purchase their first home, the government should focus on other measures for housing affordability.

"It helps people get over the line, but on the other hand you are rewarding people who are close to over the line or would have crossed the line anyway. People who have no chance at buying a home don't benefit," said Davidoff.

He said the government should focus on augmenting supply and providing financial support to renters with low income.

"I think we have a problem with too much demand or not enough supply. I'm not sure that the government ought to expand the generosity of incentives to purchase homes."