Relatively few first-time home buyers took advantage of a B.C. government program offering interest-free loans during its first nine months, says a report from the provincial real estate industry's trade association, but the program still led to a small increase in the market price of Metro Vancouver condominiums and townhomes.

From January to September last year, 1,395 loans were paid or approved through the B.C. Home Owner Mortgage and Equity Partnership, with about a third of those buyers purchasing condos or townhouses in Metro Vancouver – or 1.2 per cent of all home sales in that region, the report says. That increased the market price of the area's attached homes by just over half a per cent.

"Our analysis indicated that the [loan program] was helpful to many homebuyers, but not popular enough to cause a significant impact on market conditions, given the program timing coincided with already constrained supply conditions," the report states.

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Under the loan program, the B.C. government matches down payments of as much as $37,500 for first-time buyers purchasing any home priced up to $750,000. The buyers can obtain 25-year loans – interest-free for the first five years – if they commit to living in the home for those first five years.

The controversial loans were launched a year ago by the former Liberal government, just three months before the provincial election campaign. The government expected to attract roughly 42,000 applications over the program's three-year lifespan – about 1,166 a month. Instead, the British Columbia Real Estate Association (BCREA) report, released on Tuesday, recorded 155 applications a month in the first nine months.

During the campaign, the NDP said they wouldn't immediately cancel the program, which has a total budget of $702-million, but would review whether there are better ways to help B.C. residents in the entry-level housing sector.

On Wednesday, a spokesperson for the Municipal Affairs and Housing Ministry would not say if next week's budget would include continued funding for the specialized loans.

In the Throne Speech this week, the governing New Democrats signalled they would be taking further action to address demand in the housing market, specifically by targeting speculation by foreign and domestic buyers. The speech did not say just how the government intends to do that, although the NDP's campaign platform included a tax on speculators who buy property but do not earn money in the province.

Jock Finlayson, executive vice-president of the Business Council of B.C., said the government should scrap the program and instead look at policies that temper, rather than fuel, demand.

"If policymakers are worried about upward pressure on prices, they should not be undertaking programs that stimulate demand," he said.

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When the loan program was first unveiled, economists warned it could inflate an already overheated real-estate market. This week, those same critics said the new data show it could easily have done that if more people had used it.

The BCREA report found the median age of loan applicants buying in Metro Vancouver was 33. They earned a median income of $82,800 and spent just less than half that amount on down payments.

More home buyers did not seek out the loans because only a select few qualify for the stricter lending rules and are interested in buying cheaper properties, according to real estate economist Tom Davidoff of the University of British Columbia's Sauder School of Business.

"Ticking all those boxes at once was not going to be a unicorn, but it wasn't going to be a huge fraction of the market," he said.

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BY THE NUMBERS

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1,395

Number of loans paid or approved from January to September last year through the B.C. Home Owner Mortgage and Equity Partnership

1,166

Number of applications a month the government expected to attract over the program's three-year lifespan

155

Number of applications submitted a month in the first nine months, as reported by the British Columbia Real Estate Association