Calming demand, not adding supply, answer to Vancouver housing woes: experts
Three academics make the case for more taxation to bring soaring housing costs in line with local incomes.
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Don't be distracted by claims from the real estate industry that adding more housing supply will solve Metro Vancouver's broken housing system, housing experts told delegates to the annual Union of B.C. Municipalities conference.
“The supply claims are mainly about distracting us from doing things on the demand side,” Josh Gordon told the city councillors and local government staff gathered for a morning session as the conference started on Sept. 25. “They do not want us to tackle demand: they want to be able to build endlessly for the world's rich.”
Gordon, an assistant professor at Simon Fraser University's School of Public Policy, presented along with David Ley, a professor emeritus in the University of British Columbia's Department of Geography, and urban planner Andy Yan, director of SFU's City Program.
All three highlighted the staggering, and widening, disconnect between local incomes and house prices. Ley highlighted a measure of affordability developed by the Demographia survey: housing is considered severely unaffordable at a rate of 5.1, and Vancouver is currently rated at 11.8.
Since July 2016, foreign nationals buying property in Metro Vancouver must pay an additional 15 per cent property transfer tax. While single family home sales flattened for a time, they've begun to rebound, while the condo market has taken over when it comes to speculative frenzy.
Vancouver has also introduced an empty homes tax: one per cent of the home's assessed value if it is not occupied for at least six months of the year.
But Ley and Gordon urged government leaders to consider more taxation that targets buyers whose purchases are not supported by local incomes, such as a progressive property tax that could be offset by income tax paid.
“It's virtually impossible to dodge that,” Gordon said. “What that would do is it would mean if you wanted to own property on the basis of foreign income, that's fine, but you have to pay your full share of the taxes.”
Vancouver is now attempting to “gently” increase density in single family neighbourhoods, but has faced criticism for not allowing denser buildings like townhouses and low-rise apartment buildings in all single family zones.
But Ley said he thought an “incremental” approach, using infill options like basement suites and laneway houses, was the right one.
“With supply, we always need to put an adjective in front of the word supply: it's affordable supply. You do not need more million dollar-plus condo or townhouse units, which is typically what's been provided,” he said.
“New supply might decrease overall affordability, by driving up land prices through speculative land assembly when land zoning is anticipated — as we see happening along many of the thoroughfares.”
(Ley's stance stands in contrast with that of Tom Davidoff, a UBC economist who has also proposed to tax property owners more if they do not earn their income in Canada or leave their properties vacant. In a presentation to the UBCM last year, Davidoff argued single family zoning needs to be loosened considerably — and he suggested zoning should be made a provincial, not municipal, power in order to make that happen.)
But Ley said the current political moment is giving him hope: both the federal and B.C. provincial government are focused on housing and are interested in working co-operatively with municipalities. Ley hearkened back to a similar political situation in the 1970s, when governments built innovative communities like Vancouver's South False Creek, with a mix of housing types for different income levels.