The federal government’s new measure for first-time homebuyers could keep home sales at cooler levels until fall, said the Royal Bank of Canada (RBC).

The most recent federal budget released on Tuesday includes a program called the “First-Time Home Buyer Incentive,” wherein the country’s housing agency will pay up to 10% in newly built homes and up to 5% in existing ones. The incentive will not come into effect until fall, which means that some Canadians might hold off entering the housing market until they can take advantage of it.

“First-time home buyer activity is poised to slow down between now and September 2019, as many house-hunting millennials await more details and crunch their numbers,” said Robert Hogue, RBC’s senior economist, in a research note on Wednesday. “This could depress the market even further during that period.”

The new measure may also make it hard for the central bank to get a proper read on the housing sector. Policymakers have noted the difficulty of disentangling the impact of federal mortgage regulations and higher interest rates on the real estate market, according to a Bloomberg report.

However, even if sales are dampened throughout the spring and summer selling season, Hogue expects a rebound just before the federal election, when Canadians will be able to access the federal government’s measure.

"Any delayed purchases will fuel stronger activity in the fall," Hogue said.

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