NDP should be wary of big moves on housing
Finance Minister Carole James released the 2016-17 Public Accounts showing the Province’s financial picture as of March 31, 2017. (File Photo)
B.C.’s finance minister Carole James said the N.D.P. government is “looking at all options” to “fix the challenges” of the current housing market in Vancouver in an interview with Bloomberg in New York.
We all know about the city’s affordability problem. The cost of a typical single-family home in Vancouver currently sits at a record $1.6 million and the MLS composite benchmark price for all residential properties in Metro Vancouver is currently $1,019,400.
Vancouver has been ranked fourth among global cities most at risk for a housing bubble, according to a report last month by the UBS Global Real Estate Bubble Index (behind Toronto, Stockholm and Munich).
“All ideas are on the table to address both demand and supply,” James said.
With the typical house price about 20 times the median Canadian household income, it makes sense that the B.C. government would want to address the affordability problem but they should be very wary of any big moves.
Yes, it’s exceptionally tough for young people starting families to buy a single-family home and a drastic dip in the market would certainly help this select group. But for those who have already bought – maybe making sacrifices in the size of their home or its distance from work, a burst bubble would be start and dangerous financial spiral.
The N.D.P. has criticized the previous Liberal government for it’s 15% tax on foreign buyers and James said they are looking at creating rules around short-term speculation and restricting short-term rentals like Airbnb. Those kind of rules have a chance of nudging prices down slightly but if the N.D.P. wants to hold true to Premier John Horgan’s promise of making life more affordable for British Columbians, they will likely have to start swinging with a bigger bat.
Increasing housing supply and density may sound like a good idea, but increased density hasn’t done anything to protect Toronto from a bubble-like market. Cities like Manhattan pack people in like sardines and an apartment there now costs an average of $2 million.
Maybe instead of looking to move house prices down, we should investigate ways to nudge incomes up because if the housing market crashes, there are very few who come out on top once the dust settles.