Metro explores the latest trends emerging on the West Coast of Canada.
Metro Talks: John Horgan says NDP will target foreign owners in fight for housing affordability
Housing will be the dominant issue in the New Democratic Party’s election battle with the incumbent B.C. Liberals, its leader John Horgan tells Metro.
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Unlike his ruling political rival, British Columbia New Democratic Party leader John Horgan is ready and more than willing to use taxes in the fight against sky-rocketing costs and “rampant” offshore investment in Metro Vancouver’s housing market.
Sitting down for his first editorial board meeting of the election cycle, Horgan told Metro last week that housing is the “dominant issue” of the upcoming May 9 election.
Not that this is news to anyone struggling to make ends meet in the region.
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The red-hot market shows no signs of slowing down and threatens to price out more and more residents, seemingly by the day.
The benchmark price for all residential properties in Metro Vancouver is currently $889,100, up 29.7 per cent in May compared to the previous year, according to the Real Estate Board of Greater Vancouver.
An average house in the region is $1.5-million.
The price of apartments (you know, the tiny dwellings young people cram themselves into because they can’t afford a detached home) has shot up 22.3 per cent, to $485,000, in the last year alone.
“We see it right around this area,” Horgan says, pointing out the window of Metro’s Gastown office. “The gentrification of the Downtown Eastside is designed to bring on more housing but it has not really met the test of balancing out various income groups. So wages have been stagnant for a decade and the costs have been increasing day-by-day.”
The problem, in Horgan’s mind, is also obvious.
“Now how did the prices get so out of whack?” he asks rhetorically. “Offshore investments. Money generated elsewhere creates an artificial expectation that the wealth, when it’s expended here, is going to be distributed through the community and it’s not. Speculators are not here to put down roots. They’re not here to create economic activity. They’re here to make money.”
British Columbia only just started collecting information on foreign ownership and the Canada Mortgage and Housing Corporation says data at a federal level is “scarce”.
The B.C. Real Estate Association, meanwhile, maintains foreign investment represents less than five per cent the Vancouver’s housing market and has little bearing on affordability.
Horgan begs to differ.
“Show me the data,” he demands. “They haven’t been collecting the data so I don’t know how they could be coming to those conclusions. Anecdotal information is rampant that this is out of control and we need to address it. And that’s what I intend to do.”
In March, Horgan tabled a Private Member’s Bill proposing a “housing affordability levy” set at two per cent of a home’s market value.
The money collected would go into a housing affordability fund.
Aimed at speculators and foreign owners, the bill exempts permanent residents of Canada, seniors, people who pay an equal amount of income tax or those who have used the home as their primary residence for at least five years from paying the tax.
The bill – based on the work of University of British Columbia economists Tsur Somerville and Thomas Davidoff and similar to the speculation tax called for by Vancouver Mayor Gregor Robertson – died on the floor but Horgan says he’d implement it should the NDP form the next government.
“Once you put a lid on this being a safety deposit box for offshore investors, then you can start putting in place those initiatives that will create more supply, that will lead to dampening of cost increases,” Horgan says. “Whether or not the numbers are two, five, or 10 per cent, I think we’ll clarify that closer to the election date when we have a better sense of what the budget will look like.”
But when it comes to taxing the housing market, that’s as far as Horgan is willing to go.
Another UBC professor, Paul Kershaw at the School of Population and Health, released a report for Generation Squeeze last month calling for additional property taxes and surcharges based on the value of people’s homes.
Here, Horgan agrees with Premier Christy Clark that people shouldn’t be penalized just because they’ve managed to purchase a home or possess so-called housing wealth.
He’s also very wary of being branded as fiscally reckless by Clark during an election year.
“I think we need to dampen down the speculation element first and foremost,” he says. “I don’t think you should be taxing people because their home has become an enormously important asset to them. I think that’s the argument that the Liberals are using to discourage any talk about taxation.
“So I think if you conflate taxing people because they have the benefit of living on wealthy real estate, or in a home that’s on a piece of land that’s worth a great deal, that falls right into the Liberal trap.”
It’s not like the Liberals have come up with a better alternative, he argues.
“To ignore the affordability challenges like the Liberals have done is not going to make it better, it’s going to make it worse.”
The battleground is set.