B.C. at risk of a real estate bubble

South Saanich MLA says province has failed to adequately regulate the real estate market

In the B.C Legislature, one of the most important obligations of the “official opposition” is to expose the failures of the governing party.

Currently that party is the B.C. Liberals, led by Premier Christy Clark. To be blunt, there are many failures that I could write about, but today I want to focus in on one that has the potential to seriously impact us right here in Saanich: the failure to adequately regulate the real estate market.

In Vancouver, this failure has taken on crisis proportions. Average house prices in the city are increasing more than 20 per cent a year.

Currently a modest detached house in Vancouver routinely sells for well over a million dollars. This is a real estate bubble and it has been created and is being perpetuated in part by a lack of regulations in the real estate industry and, in particular, a lack of control on foreign cash pouring into the market

The negative consequences are very significant. Real estate bubbles can burst and create devastating economic consequences that reverberate throughout the economy. And even if that worst-case scenario doesn’t happen there are many other harms to consider: property taxes increased to match the speculative value; dangerously high debt loads for new homebuyers; and young adults or those of modest means being completely priced out of the market.

There are serious downstream impacts as well such as increased pressure on the already inaccessible rental market and more competition for the already inadequate supply of affordable housing. The Royal Bank recently warned that Vancouver is becoming “dangerously unaffordable”.

There is strong evidence that this problem has arrived in Saanich and throughout greater Victoria.

Compare May 2016 to May 2015. According to the Victoria Real Estate Board (which includes Saanich), there was a 42 per cent increase in the number of properties sold and a 20 per cent increase in the price. These indicators are part of a trend that suggests a real estate bubble may be forming in our region. Even before this recent trend, properties in Saanich were already more than 40 per cent above the national median price.

Given how serious the problem is, one must ask why the B.C. Liberal government has continued to let it worsen and spread.

The answer is likely found in the corrupting influence of big money in politics. It is no coincidence that a number of the largest donors to the B.C. Liberal Party are also B.C.’s largest real estate corporations and developers.

Would the members of the official opposition – the B.C. New Democrats – be any different if and when we become the governing party? Yes, we are clear on what we will do: ban big money in politics, from both corporations and unions. In fact, we have introduced legislation to do exactly that five times in the last five sessions of the B.C. Legislature. This simple change will reinvigorate our democracy and lead to decision-making that is in the best interests of the largest number of people, not the best interests of large corporations in their drive to maximize short-term profits.

Our critic responsible for housing, Vancouver Point Grey MLA David Eby, has also already laid out thoughtful and well-received plans for how to deflate the real estate bubble in Vancouver and stop its spread on the South Island.

We are calling for strengthened regulations and tax measures to deter absentee speculation. These solutions, endorsed by 45 economists at UBC and SFU, would also raise additional revenue for the people of B.C. from foreign purchasers who are “parking their money” in Vancouver property but leaving the homes empty.

If you agree with my viewpoint, please help by sharing this article with your friends. The more people who understand this issue the more successful we will be in ensuring the government addresses this matter properly.

Lana Popham is the MLA for Saanich South.

 

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