(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

Man sentenced for fatal Christmas Eve collision near Penticton

Crown said they could not prove beyond a reasonable doubt that man was impaired

South Okanagan Indo-Canadian pledge for hospital expansion recieves large boost

Jaswinder Garib has donated $30,000 to the $500,000 pledge

COLUMN: From pot to policing

I am sure the cannabis legalization on Oct 17 will be the number one issue on everyone’s minds

LocoLanding flowers bring joy to others in Penticton

LocoLanding Amusement Park sends flowers to Penticton residents

Thanksgiving food drive a success in the South Okanagan

Food was collected from Penticton, Summerland and Okanagan Falls for local food banks

U.S. congressman issues dire warning to Canada’s NAFTA team: time is running out

Canadian Foreign Affairs Minister Chrystia Freeland is expected to resume talks with the U.S.

Who’s running in Penticton’s election?

Candidates for the Penticton municipal and school board election

New political party holds an informational session in Vernon

Maxime Bernier’s The People’s Party of Canada draws about 2o interested patrons to Vernon pub.

B.C. MLAs reminded of rural school struggles

Finance committee hears of falling enrolment, staff shortages

B.C. VIEWS: ’Not photo radar’ coming soon to high-crash areas

ICBC deficit now largely due to reckless and distracted driving

Researchers tag great white shark in Atlantic Canada

Information will be used to learn more about where white sharks move in Canadian waters

Mix-up of bodies leads to funeral home reforms in Nova Scotia

One woman was was mistakenly cremated, another was embalmed and presented to family members during a visitation that went horribly wrong

B.C. RCMP turn to Const. Scarecrow to shock speeders into slowing down

New addition will watch over drivers from a Coquitlam median for first-of-its-kind pilot in Canada

Cyclists finish North America trip to highlight Ukraine struggle

The 10,000 bike ride raised over $10,000 for victims of the war in Ukraine.

Most Read