(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

Nanaimo RCMP say busts and arrests will have an impact on organized crime

Over $350,000 worth of drugs seized by police after busts in Nanaimo, Vancouver and Richmond

Nanaimo byelection candidates outline their priorities

Candidates provide their reasons for running and their priorities, in their own words

Investigation ongoing after hit-and-run in downtown Nanaimo leaves woman injured

Police say a Toyota Camry found abandoned on Cliff Street in Nanaimo

LETTER TO THE EDITOR: Respect ferry etiquette

Letter writer suggests that we consider the ferry terminal and the ferry itself as a ‘village’

Western Edge Theatre presents ‘Between the Sheets’ at Harbour City Theatre

Canadian play centres on an intense parent-teacher interview

Nanaimo byelection candidates get their first chance to debate

NDP, B.C. Liberals, Greens participated in Forum for Millennial Leadership debate Monday

Teravainen’s 3 points lift Hurricanes to 5-2 win over Canucks

Vancouver heads into all-star break on losing note

47 men arrested by Vancouver police for allegedly seeking sex with teenage girls

Seven of those arrested have been charged as part of a two-month operation

B.C. hospital apologizes for veteran’s five-day hallway stay

Clinical director of Victoria General Hospital says case of retired veteran ‘definitely excessive’

Speaker Darryl Plecas says ‘justice’ needed for legislature employees

Plecas spoke to media at the opening of a pedestrian and cycling bridge in Abbotsford Wednesday

Advocate hopes B.C. legislature scandal leads to more transparency

‘Depressing’ that it takes a scandal to inspire freedom of information reform, says Sara Neuert

‘Dr. Lipjob’ avoids jail, gets 30-day suspended sentence

She will have to serve the 30 days in prison if she commits a breach during her two-year’s probation

Ex-Mountie involved in Taser death at Vancouver airport sues government

Kwesi Millington claims he acted in accordance with RCMP training

Most Read