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The Liberal government addressed concerns about housing affordability in the budget by investing $1.25 billion over three years to introduce a mortgage incentive for first-time homebuyers earning under $120,000 per year. For those who meet the criteria, the government will finance five per cent of mortgages on existing homes and 10 per cent on those that are newly constructed.

First-time home buyers will also now be able to withdraw $35,000 from their RRSPs — up from $25,000 — without paying taxes to pay for their homes.

Morneau expects the initiatives to increase the number of first-time homebuyers by up to 40 per cent, from the current mark of 100,000 per year to 140,000.

Under the plan, however, the total value of the incentive and the mortgage cannot exceed four times a participant’s income, or a maximum of $480,000, meaning that it may be of limited help to those looking for houses in the country’s most expensive markets — Vancouver and Toronto.

In February, the benchmark price for a home in the Greater Toronto Area was $767,800, according to the Canadian Real Estate Association. In Greater Vancouver, the benchmark price continues to exceed $1 million. Only average home prices in markets in Alberta, Saskatchewan, the East Coast and select areas in Ontario such as the Niagara Region and Ottawa are below $480,000.

“We expect that the initiative we put in place will have an impact across the country, including in Toronto and Vancouver,” Morneau said, emphasizing that the government had only considered measures that would not destabilize the housing market.

When asked if he had a back-up plan in case the Liberals’ housing measures don’t work or drive up demand even further, Morneau answered briefly: “These measures will work.”

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