Use of the HBP Drops in Québec - The QFREB calls for a modernization of the program in order to increase the homeownership rate in Québec Français
L'ÎLE-DES-SŒURS, QC, Sept. 26, 2017 /CNW Telbec/ - After analyzing exclusive statistics from the Canada Revenue Agency regarding the Home Buyers' Plan (HBP), the Québec Federation of Real Estate Boards (QFREB) found that use of this program is decreasing in the province. From 2002 to 2015, the number of HBP withdrawals declined almost continuously, from 38,880 to 26,910 withdrawals.
"It is normal for there to be fewer HBP withdrawals during periods when fewer properties are being sold," said Paul Cardinal, Market Analysis Manager at the QFREB. "However, this is not what happened. While the number of HBP withdrawals fell by 31 per cent from 2002 to 2015, the number of Centris® sales increased by 9 per cent1. Thus, the decline in popularity of the HBP was not due to a decrease in residential sales," he added.
How then can we explain the slowdown in the use of the HBP, which enabled nearly half a million Québec households to become homeowners, and which remains an excellent program due to the tax benefits it provides to first-time buyers?
The purchasing power of first-time buyers is crumbling
"One of the most likely hypotheses for explaining the drop in HBP use is that first-time buyers did not manage to contribute to their RRSP at the same pace as property prices increased," explained Mr. Cardinal. "One thing is sure – salary increases have not kept up with property price increases. This would partly explain the drop in the volume of withdrawals during the period of 2002 to 2015," he added.
The inflation of property prices in recent years has also resulted in a significant loss of purchasing power for first-time buyers. A dollar withdrawn from an RRSP as part of the HBP in 2002 was worth only $0.48 in 2015. If the average HBP withdrawal amount followed the same pattern as the increase in property prices, it would have more than doubled during the same period.
However, the increase in the average withdrawal amount from 2002 to 2015 was only 23 per cent, as it went from $11,431 to $14,077. It is clear that this increase is quite small when compared to the 108 per cent increase in the average property price.
Modernizing the HBP
The QFREB believes that modernizing the HBP or implementing new measures to further stimulate homeownership are required, particularly since Québec has the lowest homeownership rate in the country (61.2 per cent compared to more than 70 per cent in the rest of Canada).
The QFREB recommends broadening the scope of the HBP by allowing – under certain conditions – people who have already benefited from the HBP to re-apply in the event of a spouse's death, a separation, a work-related relocation or the decision to accommodate an elderly family member. These life changes may compromise a household's ability to remain owners.
The QFREB, like the Canadian Real Estate Association, also wants the federal government to increase the maximum HBP withdrawal amount to $35,000 per person, which would better reflect current real estate prices. The maximum HBP withdrawal amount of $25,000 has not been revised since 2009.
Finally, the QFREB recommends that the HBP be used in an intergenerational manner by allowing parents to withdraw money that has accumulated in their respective RRSPs and transfer it to their children so that they can buy their first home.
Other measures could also promote homeownership
Along with a modernization of the HBP, the QFREB also advocates that first-time buyers be exempt from paying transfer taxes (commonly referred to as the Welcome Tax). The Québec government could also examine the appropriateness of implementing a provincial program that addresses the problem of first-time buyers accumulating a down payment, based on programs such as the Accès Famille program in Québec City or the City of Montréal's Accès Condos program.
About the Québec Federation of Real Estate Boards
The Québec Federation of Real Estate Boards is a non-profit organization composed of Québec's 12 real estate boards and the close to 13,000 real estate brokers who are their members. Its mission is to support Québec's real estate boards in order to defend, protect and promote the interests of real estate brokers through the provision of services in the areas of professional practices, public affairs and market analysis. The QFREB is guided by an approach that is centred on collaboration and resource sharing.
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1 New properties sold directly by the builder and existing properties sold directly by the owner are not included in the Centris® database.
SOURCE Québec Federation of Real Estate Boards
Jacynthe Alain, Assistant Manager, Communications and Public Relations, Québec Federation of Real Estate Boards, Tel.: 514-647-8249, [email protected]
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