(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

Bertrand Creek Enhancement Society responds to town centre proposal

Society member Andrew Sigalet says the Janda Group’s plan is ‘the best proposal’ he’s seen to date

Langley’s supportive housing dubbed Creek Stone Place

The project is set to open this spring to house 49 homeless people.

Nominations open for Langley-Aldergrove Conservative race

Longtime MP Mark Warawa is stepping down at the Conservative candidate.

Langley developer’s appeal of extradition denied – faces fraud charge

The Court of Appeal has denied Mark Chandler’s attempt to avoid extradition to California.

VIDEO: RCMP ask kids to help name soon-to-be police dogs

13 German shepherd puppies will be born this year

Horvat scores 16 seconds into OT as Canucks beat Blackhawks 3-2

Pettersson sets rookie scoring record for Vancouver

No injuries, pollution in Vancouver Harbour ship collision: Transport Canada

Transportation Safety Board says it has deployed a team of investigators look into the incident

Budget 2019: Five things to watch for in the Liberals’ final fiscal blueprint

Finance Minister Bill Morneau will release the Trudeau government’s final budget on Tuesday

New concussion guidelines launched for Canada’s Olympians, Paralympians

The guidelines will be in effect at this summer’s Pan American, Parapan American Games in Lima, Peru

Accused Surrey transit cop shooter’s bail hearing set for April

Daon Gordon Glasgow, 35, is accused of shooting Transit Police Constable Josh Harms, 27

Alphonso Davies doubtful for Canada game against French Guiana in Vancouver

Canada will be without injured captain Scott Arfield and veteran Will Johnson

Watchdog called after man who yelled racial slurs at B.C. vigil hurt during arrest

BC RCMP say man was ‘acting suspiciously’ at prayer vigil for victims of New Zealand mosque shootings

Most Read