(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

Evacuation alert issued due to Dog Creek Trail Wildfire

An evacuation alert has been issued by the Regional District of Bulkley-Nechako… Continue reading

Locals converge for Cannabis Community Consultation meeting

Public feedback taken into account as DOV moves forward

Holi Festival of Colours celebrated in Vanderhoof

Last weekend, around 20 Vanderhoof residents took part in Holi, a Hindu… Continue reading

College of New Caledonia announces early childhood educator training

Vanderhoof students may benefit from the program expansion

Vulnerable B.C. communities receive funds for structural flood mitigation

Communities throughout British Columbia that have been partial to flood risks in… Continue reading

VIDEO: Trudeau shuffles familiar faces, adds new ones to expanded cabinet

Justin Trudeau shuffles his front bench Wednesday to install the roster of ministers that will be entrusted with leading the Liberal team into next year’s election.

Evacuation alert issued due to Dog Creek Trail Wildfire

An evacuation alert has been issued by the Regional District of Bulkley-Nechako… Continue reading

14-year-old pilot attempts to break Guinness World Record at B.C. airport

Mohd Shaikhsorab wants to become youngest pilot with fewest hours logged to fly solo

Price no guarantee for safety with horse riding helmets: new report

A Swedish insurance report reveals that many brands of equestrian helmets do not protect riders as well as they could.

One year later: Still no suspects in killing of 13-year-old B.C. girl

Marrisa Shen was killed in Burnaby’s Central Park on July 18, 2017

BC Games opening ceremonies promise to be magical

Features Shane Koyczan and his band, Asani, parade of athletes, and lots more

VIDEO: Toronto Raptors send DeMar DeRozan to Spurs in colossal NBA trade

Toronto also sent Jakob Poeltl and 2019 first-round pick, gets Kawhi Leonard and Danny Green

More lightning forecast as storm sparks 38 new wildfires in B.C.

22 new fires in are burning in the Kamloops Fire Centre according to the BC Wildfire Service.

Most Read