Conservatives Would Raise Home Buyer’s Plan RRSP Withdrawal Limit: Harper

The Conservative Party of Canada has made two more pre-election pledges aimed at home buyers, one of them promising that if elected, the federal government would raise the maximum permitted amount taken from an RRSP to put as a down payment on a first home.

Currently the Home Buyer’s Plan allows first-time buyers to take up to $25,000 out of their RRSP to put down on the purchase or construction of their first house, as long as it is repaid. This maximum would be increased to $35,000 under a newly elected Conservative government.

“For many Canadians, owning a home is their most important investment and the achievement of a key life goal,” said Prime Minister Stephen Harper. “We want to help more Canadian families purchase their first dream home.

“With this increase, we will continue to help families know the pride and stability of having a place to call their own.”

However, the proposed increase to the program has already been criticized by some media commentators.

Rob Carrick of the Globe and Mail wrote, “Unless your living is tied to the sale of houses, there’s no good face to put on this news. It may strengthen an already pricey housing market, and it would certainly feed a developing financial imbalance in the country where people emphasize houses over investing.” 

And Robert McLister, writing on Canadian Mortgage Trends, said, “Just a fraction of first-timers will benefit from this change, as the average RRSP contribution is only about $3,500 a year, and only 10 per cent of first-time buyers use RRSPs to pad their down payment.”

The party also said that it was aware that, “Another issue for aspiring home buyers, especially in Vancouver and Toronto, is the affordability of housing. Real estate commentators have suggested that speculative foreign buyers are a significant factor in driving homes out of the price range of average families in some parts of the country.”

Harper said, “If, in fact, foreign speculators are driving the cost of housing to unaffordable levels, that is something the government can, and should, find a way to address.

“Our government will commit to collecting comprehensive data on foreign buyer activity in Canada’s housing market. We will then take action in coordination with provinces to ensure foreign investment in Canada’s housing sector supports the availability and affordability of homes for Canadians.”