B.C. Budget boon to Chilliwack home buyers and builders

The $10,000 tax credit for first-time new house buyers should be good news for buyers in Chilliwack, says Cynthia Admiraal.

The $10,000 tax credit for first-time new house buyers in the 2012 provincial budget should be good news for buyers and builders alike in Chilliwack, says Cynthia Admiraal.

“I think we have enough new housing in Chilliwack that it would benefit,” she said, from the additional first-time buyers the tax credit is expected to encourage into the market.

Coupled with already lower house prices in the Chilliwack area, and with continued low interest rates, the tax credit could have a “significant impact” on the housing market here, agreed Admiraal, president of the Chilliwack & District Real Estate board.

“Our city has a lot to offer young families,” she said, including good schools, parks, recreational facilities — and gasoline prices lower than those in the Vancouver area.

But another new housing measure in the budget, an increase in the HST rebate threshold to $850,000 from $525,000 is not expected to have much impact here because of those same low house prices.

“There’s not a lot of those high-end houses” being built in Chilliwack, Admiraal said.

The rebate — up to a maximum $42,500 from $26,250 — will now be available to buyers of more expensive homes, until the HST is finally phased out.

The 2012 budget also contains a grant — equivalent to the HST rebate — on new housing that’s used as a second or recreational residence. Eligibility for the grant is limited to areas outside the Greater Vancouver and Victoria regional districts.

All three budget items are “certainly welcome relief for many homebuilders and developers,” agreed Cameron Muir, chief economist at the B.C. Real Estate Association.

He said the $10,000 tax credit “will likely push some potential first-time buyers off the fence and into the market” rather than waiting until the HST comes off new homes.

And the increase in the rebate threshold should impact homebuyers who “have been somewhat reticent about spending extra money on higher-end houses.”

But Muir said it’s difficult to say when the housing market in B.C. will really turnaround because of “headwinds” related to the “slower than optimum” economic growth seen in Europe and the U.S.

Not until there is “strong” economic growth in the U.S. in particular, Muir said, will B.C. see a “more well-rounded economic expansion” spurring house sales back to pre-recession levels.