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VANCOUVER (Reuters) - First-time home buyers in British Columbia, home to Canada's most expensive real estate market, started applying for loans from the provincial government on Monday under a program it says will make ownership more affordable.

The Western Canadian province last month unveiled a plan to provide 25-year loans of up to C$37,500 ($28,480) to qualifying buyers to help with their first down payment. The loans are interest-free and require no repayment in the first five years.

Twenty-four applications had been submitted as of 1 p.m. PT (1600 EST), a spokeswoman for the minister responsible for housing said in an email.

The program has been criticized by economists and academics who say it will pile more debt onto already financially-stretched residents and increase home prices even more in a region where a supply shortage is the real problem.

Some have said the plan, launched four months before a provincial election, is politically motivated.

"If this program does anything, the only thing it can do is increase demand. It can't increase supply. That puts upward pressure on prices and ultimately harms affordability," said Joshua Gottlieb, an assistant professor of economics at the University of British Columbia.

The provincial government and Vancouver's municipal government have taken several steps over the past year aimed at cooling the red-hot housing market. Prices for a typical single-family home in British Columbia's biggest city surged 19 percent last year to nearly C$1.5 million.

Most notable was a 15 percent tax introduced in August by the province on house purchases by foreigners in Vancouver after many residents and housing advocates complained that international buyers, especially from China, were driving up prices.

The tax has damped sales and led some real estate agents to forecast near double-digit percentage declines this year in prices, which until now have remained resilient. Since August, Vancouver-area home sales have fallen each month and in December dropped nearly 40 percent compared with the same month a year earlier.

For prices to become more affordable, however, supply needs to be increased, Gottlieb said.

"The city government should make it much easier to increase density. And the provincial government should pressure the city to do that," he said.

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