Vancouver Mayor Gregor Robertson is calling on the federal and provincial governments to intervene with measures to cool off the region's scorching real estate market.
The frenzied sales activity within Vancouver's city limits has spilled into the suburbs over the past three years. Record-high prices have been set across the Lower Mainland, including properties in the Fraser Valley.
"These trends are not sustainable and we need to be wide awake to the risks they pose to the stability of our economy, let alone the impact they have in pushing local residents, especially young people, families and seniors, out of our neighbourhoods," Mr. Robertson said in a statement on Sunday.
He reiterated his call for the provincial government to introduce a speculation tax to discourage houses from being flipped by investors for short-term gains.
Mr. Robertson had raised the idea of such a tax in May, 2015, when housing critics at a Vancouver rally sought to draw more attention to the lack of affordable accommodation, especially for millennials. On Sunday, he said the chorus is growing louder about the impact of soaring real estate prices in the region.
"While adding more housing supply is crucial, it is not an affordability solution on its own," Mr. Robertson said.
"With unregulated, speculative global capital flowing into Metro Vancouver's real estate, we are seeing housing prices completely disconnected from local incomes. First and foremost, housing needs to be for homes, not just treated as a commodity."
Benjamin Tal, deputy chief economist at CIBC World Markets Inc., said last month that while it is unclear how extensive foreign investment is within the Vancouver region's housing market, it makes sense to implement a speculation tax, notably on overseas buyers who engage in flipping.
Data from BC Assessment from Jan. 1, 2014, to early 2016, shows a general flipping rate of 5.6 per cent of the single-family detached properties surveyed within the City of Vancouver. But some observers say that rate understates the impact on prices because in a rising market, three or four homes flipped in a neighbourhood will influence the value of similar properties listed in that area.
The mayor also suggests B.C. Premier Christy Clark's Liberal government implement a luxury tax on high-end sales.
"I urge the provincial and federal governments to heed the warnings from the financial sector and implement clear measures to rein in the excesses of Vancouver's housing market," Mr. Robertson, who has been lobbying Ottawa to invest money to create more affordable housing, said.
There have been red flags raised recently by the banking industry about consumer debt levels. Some bankers have urged Ottawa to raise minimum requirements for down payments.
Generation Squeeze, a lobby group formed to represent the views of Canadians in their 40s and younger, complains that the federal and B.C. governments have resisted calls to move aggressively to dampen the Vancouver area's housing scene.
The B.C. government has said there are undesirable consequences to intervening, especially the potential reduction in value of properties held by existing homeowners.
Josh Gordon, an assistant professor at Simon Fraser University's School of Public Policy, is among the industry observers who argue that foreign demand is the main driver of the residential housing boom in the Vancouver region, especially an influx of buyers from China acquiring detached houses.
But Dan Morrison, president of the Real Estate Board of Greater Vancouver, said last week that the thriving economy and job growth amid limited listings were key factors behind unprecedented sales activity recently.
Over the past three years, the median price for detached houses sold on Vancouver's west side has jumped 68 per cent to $3.53-million and surged 72 per cent to $1.56-million on the city's east side.
The benchmark price for detached properties sold in Greater Vancouver hit a record $1.51-million in May, an increase of 37 per cent from the same month in 2015.
The benchmark is a representation of the typical house in an area, excluding the most expensive transactions.
Within the Fraser Valley Real Estate Board, which includes sprawling Surrey, the benchmark price for detached homes has surged 38 per cent to $834,200 over the past year.