(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

‘Two ducks, five bucks’ for annual rubber duckie race in Bowker Creek

Oak Bay High Environment Club host event Saturday in celebration of vital Oak Bay creek

Esquimalt council green-lights first mass-timber building on Vancouver Island

Mayor appreciates 12-storey structure’s proximity to naval base, graving dock and Seaspan

Victoria beaches 1,560 pounds lighter after Surfrider cleanup

200 people came out to clean the beach on Earth Day

Sooke makes call for regional fire dispatch

Some municipalities decide to take service off-Island

Greater Victoria School District adopts new dress code policy

Two years in the making, SD61 moves to more inclusionary guidelines

Parents call for change to health laws after Oak Bay teen’s death

Accidental overdose has Elliot Eurchuk’s parents seeking change to B.C Infants Act

Amalgamation Yes hosting citizen’s assembly info meeting Wednesday at Vic High

Mayors of Victoria and Saanich will be on hand to give updates to residents

Doctor sees healing power in psychedelic plant as Peru investigates death of B.C. man

Peru’s attorney general has ordered the arrest of two suspects in the killing of 41-year-old Sebastian Woodroffe

Toronto police officer ‘gave himself the space and time’ in van attack

Footage shows officer standing up, turning off his siren and talking clearly to the suspect

$1.18 to $1.58 a litre: Are you paying the most for gas in B.C.?

Gas prices across B.C. vary, with lowest in Vernon and highest in – you guessed it – Metro Vancouver

Greater Victoria wanted list for the week of April 24

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

Inquest set 10 years after B.C. woman shot, left to die

Lisa Dudley, and her partner, Guthrie McKay were shot in their Mission home in September 2008

B.C. hockey team to retire Humboldt Bronco victim’s number

BCHL’s Surrey Eagles to retire Jaxon Joseph’s No. 10 in light of bus tragedy

B.C. Hells Angels invited to rally by anti-SOGI organizer

The Culture Guard group has helped Hells Angels in the past, said its executive director.

Most Read