David Eby speaks during a press conference at Legislature on Wednesday, March 27, 2019. The B.C. government says it's investing $2 billion in a low-interest loan program for builders of affordable housing. Housing Minister David Eby says the financing will be provided to private developers and community groups through the province's HousingHub program, a division of BC Housing. THE CANADIAN PRESS/Chad Hipolito

VICTORIA - The B.C. government is investing $2 billion in a low-interest loan program for builders of affordable housing.

Housing Minister David Eby said Thursday the financing will be offered to private developers and community groups through the province's HousingHub program, a division of BC Housing.

The funding will target projects for renters and buyers with average household incomes of $75,000.

Eby said the loans will be provided at below-market rates and in return, developers will commit to passing the construction savings on to residents through more affordable rents and housing prices.

The loans will be repaid once construction is complete, allowing HousingHub to reinvest in more units, he added.

Finance Minister Selina Robinson said the funding is part of Budget 2021, which will be unveiled in full next week.

"For far too long, housing in British Columbia was viewed as a commodity and a tool for building wealth, rather than a basic necessity of a home," said Robinson, who was the housing minister before taking on the finance portfolio.

"The simple truth is, affordable housing is life changing."

In order to ensure the savings are passed on to the residents, each developer must make a 10-year commitment around affordability. The agreements signed are unique to each project, Eby said.

Financing rates will depend on factors like a developer's credit rating and relationship with banks, he said.

BC Housing has already received about 90 applications from builders interested in accessing a loan, he said.

"There's lots of demand and competition for the funding," Eby said.

Applications will be prioritized based on maximizing affordability, such as the number of units and the price per unit offered to tenants or buyers, he said.

Developments will also be assessed through a geographic lens to ensure the benefit of the program is felt across the province.

"There's really not a community in our province that isn't facing some aspect of the housing crisis, although it looks different in different communities," Eby said.

Paul Kershaw, an associate professor at the University of British Columbia's school of population and public health, said the HousingHub is a positive and important program.

The program has seen private developers partner with non-profits to deliver the housing, which is an effective way to ensure the supply is affordable for middle-income households, said Kershaw.

But increasing supply should be complemented with other policy measures if the government truly wants to dampen the escalating housing market, he said.

"Anything being built and offered anew in a setting where ... home prices continue to rise on average is going to erode the affordability that the provincial government is aiming to bring in by offering these low-interest loans," he said.

Complementary measures could include similar low-interest loans aimed at strengthening other parts of the economy, such as small businesses, he said.

British Columbia is in an unhealthy situation when 18 per cent of B.C.'s economy is real estate rental and leasing, but only two per cent of the population is employed in that sector, Kershaw said.

"It is a massive gap and as a result, that's why there's big growth in that industry but it's not generating earnings that are spread out to a whole bunch of people," he said.

The Opposition Liberals said skyrocketing housing prices during the pandemic show the NDP government's housing plan is failing.

The party referenced a report from the B.C. Real Estate Association that found the average home price in the province increased by 20.4 per cent last month compared with the same time last year. At the same time, active residential listings dropped by 24.4 per cent as the housing supply sunk to the lowest level seen in decades, it said.

"It’s clear that the NDP’s supposed solutions for affordability have had no meaningful effect on the housing market," housing critic Ben Stewart said.

"Young British Columbians are still watching their dreams of home ownership fade away, while this government takes an undeserved victory lap.”

— By Amy Smart in Vancouver.

This report by The Canadian Press was first published April 15, 2021.

News from © The Canadian Press, 2021