B.C. Finance Minister Carole James delivers her budget speech in the Legislature in Victoria on Tuesday.Chad Hipolito
British Columbia's picturesque Lower Mainland is an eye-wateringly expensive place to buy or rent a home, to the point that there is a long-standing housing crisis in the region.
Now the province's NDP government is going to try to tame the beast. Finance Minister Carole James' budget, announced this week, includes money for new low-cost housing, increases to the land-transfer tax for high-priced homes, a so-called speculation tax on non-resident owners, and measures to thwart "hidden ownership" via corporate vehicles.
The package has been largely well received, characterized as a serious answer to a serious problem.
But industry groups and market analysts are skeptical the B.C. budget will meaningfully improve affordability, and they warn of unintended consequences like chasing foreign capital to other Canadian cities.
There is reason to believe, for instance, that the new measures won't solve the affordability problem any more definitively than the existing special tax on foreign buyers that Ms. James is planning to raise and expand.
And while it is firmly on-brand for the NDP to hike taxes on the rich, the reality is that anyone who shells out $3 million for a house can absorb the higher land-transfer tax.
As well, the new property tax imposed on cottage and ski-chalet owners from outside the province, many of them from neighbouring Alberta, will pad B.C. coffers and pay for new spending, but do nothing to raise the vacancy rate. It's not clear it will even depress the resale market – B.C. is and will remain an attractive destination for the well-heeled.
To wit, while single-family home prices have stabilized since last summer, the condo market has taken off. According to the Real Estate Board of Greater Vancouver, the typical unit costs $665,400, up 70 per cent since 2015.
The Canadian Mortgage and Housing Corporation's latest forecast suggests that, even with rising mortgage rates, there is no short-term relief in sight.
Finally, as broad as the plan is, it conspicuously elides one solution that has worked in other crowded cities: urban zoning reforms designed to increase density in residential areas. We are going to wait before declaring the government's plan to be the right one.