It takes a certain skill set to try to fix a problem and possibly botch it up even more but the B.C. government is certainly testing the idea as it flails about hoping to cool Vancouver’s red hot housing market.
For months, the BC Liberal government had been in denial over the issue: Overblown, isolated to a few neighbourhoods, it said.
Since then, its approach has gone from “the market will correct itself” to a “bold action plan,” to legislating a retroactive 15% tax on foreign ownership.
Along the way, the government bought time by setting up a panel to investigate allegations of questionable practices in the real estate industry and retaining the Conference Board of Canada “to conduct a research study on housing affordability.”
It did seem impatient, though. In a few areas under review, the government acted first, final reports be damned. It muddied the waters in early July by releasing 19 days of data on foreign home ownership transactions.
Finance Minister Mike de Jong was left flat-footed when asked why he didn’t wait a day or two to include transactions from June 30, when a significant number of home sales would have closed. Despite cautions over the data, it didn’t stop the self-interested from embracing the numbers. “See, no problem,” they said.
Then two weeks ago, a new data set that showed there may be a problem after all. The self-interested switched tack fast. Suddenly, five weeks of data was insufficient to form any real conclusions, even though the caveat-laden 19-day data set had been just fine.
While most of the government’s effort has focused on home prices, it’s not all about flipping, buying and selling. A lot of the debate surrounds what the government means by “affordable.”
Some of the one-bedroom units in an “affordable” rental-housing project in Victoria, the Azzurro, will go for $950 per month. The average rent for a two-bedroom apartment in Metro Vancouver is $1,410. In Sudbury, Ont., the average is $953, a difference of $5,484 per year.
Why a comparison with Sudbury?
Out of 28 census metropolitan areas, Sudbury had a higher median family income in 2014 than Victoria, Vancouver and Abbotsford-Mission. The difference with Vancouver was $11,410.
Many may be under the mistaken impression that the government is building far more affordable housing than it actually is, given the plethora of news releases that accompany each project.
A problem 30 years in the making doesn’t get solved on the fly and that’s part of the problem with the province’s recent initiatives. You don’t get the sense of a comprehensive housing policy but a mishmash of knee-jerk reactions.
Case in point? The tax on foreign ownership.
Compliance with Canada’s obligations under NAFTA, Charter issues and scuttled home purchases have been raised as potential risks.
There are possible workarounds. One real estate agent has already advertised the 15% equivalent to “We pay the GST” sales.
The biggest worry, however, may be its regional nature. The tax may simply push the problem down the road.
It seems Prime Minister Justin Trudeau’s warning following a Vancouver housing roundtable in June fell on deaf ears: “There’s no question that concerted, thoughtful effort is going to be needed to address the situation but we have to be very wary of unintended consequences.”
--Dermod Travis is executive director of IntegrityBC.
www.integritybc.ca
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