(Martin Widenka photo)

Speculation, foreign buyers’ taxes won’t solve B.C.’s housing crisis: economist

Expert slams the NDP government’s proposed methods to reduce demand

Trying to push down housing prices by lowering the housing demand could hurt B.C.’s economy, the B.C. Real Estate Association says.

Chief economist Cameron Muir said their models show that even a 10-per-cent rapid drop in home prices could mean a 1.5-per-cent economic downturn, 26,000 jobs lost, and 10,000 fewer housing starts.

“It could effect the economic growth of the province in terms of economic output, but also retail sales, labour market, unemployment rate, housing starts and of course also the loss in equity and homeowners which comprise 70 per cent of B.C. households,” said Muir.

“Home prices don’t fall on their own. There are ramifications to that.”

The NDP government has faced near-constant backlash since it announced a speculation tax in February. The tax would charge homeowners who don’t pay income taxes in B.C. up to two per cent of property values each year in a bid to cool the market.

READ: Rural cabins, cottages exempted from speculation tax

The foreign buyers tax – a 20-per-cent tax on property purchased in B.C.’s major urban areas by non-Canadian citizens or residents introduced by the previous Liberal government – made a lot of potential homebuyers “skittish,” he said, delaying home purchases for several months and without doing much to push down prices.

Developers see potential buyers hesitate, he said, and in turn, slow down the pace of their construction projects.

READ: ‘Not well thought out:’ Arizona family slams B.C. speculation tax

Instead, he said, the province could focus on ramping up supply because that would not only ease the pressure on prices but also provide plenty of jobs.

Muir pointed to the record-breaking 42,000 homes being built in Vancouver currently, up from a previous high of 27,000 units.

That number is mirrored across the province, he added, with many homes under construction set to be complete within the next several quarters.

Once those homes are built, house prices will flatten, Muir said.

“The prime culprit for rising prices is that it takes so long to complete a housing project … we’re talking five years or longer.”

A 2017 Fraser Institute report found that on average, it takes 10.2 months just to approve a home build in the Lower Mainland.

Most new housing starts are multi-family, Muir added, which take longer to build, even if they eventually house more people.

Although he said there’s “no silver bullet” for getting more houses built, stopping a record-breaking building season is certainly the wrong choice.

“In my mind, it’s folly to stall out the construction industry now.”


@katslepian

katya.slepian@bpdigital.ca

Like us on Facebook and follow us on Twitter.

Just Posted

Coroners office investigates death of Victoria-area teen

Investigation involves ‘male teenager’, confirmed student at Oak Bay high

Cops corral pig on the loose in Cordova Bay

Pig was trotting towards Pat Bay Highway from Cordova Ridge

Greater Victoria Teachers’ Association joins counter-protest

GVTA released statement of support for LGBTQ in response to upcoming protest

Iconic Mount Douglas beach rock vandalized with graffiti image

Saanich Parks staff will try to remove at low tide

WATCH: Topaz Park open house scheduled for Saturday

This will be the final stage of public engagement for park design

Lt.-Gov. Guichon believes she made the right decision

Outgoing Lt.-Gov Judith Guichon said her most memorable moments weren’t surrounding the election

Spring Home Show this weekend in Colwood

West Shore Parks and Recreation will be transformed to showcase everything home related

VIDEO: Smokers talk pot rules at annual 4-20 event

Annual pot protest-meets-festival in Vancouver attracted hundreds to vendors, concert

Saanich’s Shew sisters win gold, silver at national wrestling championships

Kiana, 17, won gold while Zena, 14, won silver at nationals

Camosun launches cannabis training courses

Growing Cannabis for Professionals is available online through continuing education

New funds, recruits set to alleviate B.C. sheriff shortage

The Government of British Columbia announced new sheriff graduates, funding for more classes

Video: RCMP investigation gets a deer little photobomb

Princeton RCMP were conducting a drug investigation in Princeton which a deer strolled through

Farnworth says five years too long for feds to deal with organized crime in medical pot

Needs to be dealt with much sooner than that, B.C. Public Safety Minister says

UPDATED: Unions, CP Rail come to agreement, avoiding work stoppage

Locomotive engineers, conductors and signals specialists seeking new collective agreements.

Most Read