The federal government expects the newly launched first-time home buyer incentive to help 100,000 buyers, but some brokers and analysts are skeptical about its impact on the country’s priciest housing markets.

“It’s a very narrowly focused program,” Phil Soper, Royal LePage’s president, told Bloomberg. “It’s just not a big enough slot of the market to move it.”

The incentive is available to buyers with an annual household income of $120,000 or less, and the mortgage-to-income ratio must be no more than four times the household income. Under those conditions, the maximum purchase price allowed is about $565,000.

That puts housing markets such as Toronto, Kitchener-Waterloo, Greater Vancouver, and Victoria out of reach of the average buyer. Cities where homebuyers would be more fortunate include Montreal, Ottawa, Calgary, and Edmonton, according to real estate website Zoocasa.

The incentive will also encourage construction to help alleviate the country’s housing shortage, according to the Canada Mortgage and Housing Corporation (CMHC).

“Despite the income and borrowing limits, we are confident this program can work in all markets, including Vancouver and Toronto,” said Audrey-Anne Coulombe, CMHC’s spokeswoman. “[The average prices in those cities] are not the same as starter-home prices. In the first quarter, 32% of units sold in Toronto and 20% in Vancouver were under $499,000.”

Still, the effort may result in less than 5,000 purchases a year, according to a report by Mortgage Professionals Canada (MPC). Buyers’ resistance to give up equity in their homes and the requirement for mortgage insurance will be a substantial impediment, said Will Dunning, MPC’s chief economist.

“The government says it wants to make homeownership more affordable and accessible, but its actions say otherwise,” Dunning said. “[The proposals] to improve access are likely to have only small positive effects.”

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