B.C. throne speech—government vows action on high house prices, but ignores their cause
The British Columbia government dedicated a significant portion of its recent throne speech to “solutions for housing.” In particular, the speech focused on the “threat” posed by “speculators” and the need to spend more on social housing. Not only do these narratives threaten to divide British Columbians, but they don’t get to the core of the affordability issue. Metro Vancouver’s housing crunch exists primarily because there aren’t enough new homes getting built.
Metro Vancouver is a growing region with a buoyant economy, meaning people from all over B.C., Canada and elsewhere continue to relocate there. More people, higher incomes and historically low interest rates mean there’s growing demand for housing—a lot more housing. In fact, a recent report by the Canada Mortgage and Housing Corporation (CMHC) argues these three factors alone account for almost three quarters of this region’s house-price growth between 2010 and 2016.
Clearly, there’s enormous demand for homes in Canada’s most expensive urban region. So where’s the supply?
Yes, new homes get built in Metro Vancouver, but not nearly enough to cool down price growth. Here too, the CMHC’s report finds that B.C.’s largest metropolitan area has been lagging, supporting findings from Fraser Institute work on housing supply in Canada’s largest cities. By addressing this fundamental mismatch between demand and supply, housing will become more affordable.
Indeed, B.C. Premier John Horgan acknowledged in December that “If there aren’t enough places for people to live, the first thing you have to do is build more,” indicating some understanding of the problem.
And yet, beyond a vague pledge to “enable local governments to plan for affordable rental housing by zoning areas of their communities for that purpose,” the throne speech’s measures on housing consist almost exclusively of actions aimed at chasing away demand from ill-defined “speculators” or building social housing. Again, neither of these vague initiatives strike at the heart of the problem.
After years of rapid price growth in the province’s hottest housing market, it’s disconcerting to see more of the same policies that have failed so many British Columbians struggling with housing affordability. Without a marked increase in the supply of new homes, prices won’t come down any time soon for Metro Vancouverites.
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