Vancouver’s million-dollar home prices aren’t just straining buyers, they’re holding back investment and businesses, said British Columbia’s finance minister, vowing to look at every option on the table to cool the market.
“It’s become a bigger issue -- it’s become an economic issue for companies that can’t find opportunities to retain and attract employees,” Carole James, whose New Democratic Party-led government took power in July, said in an interview Tuesday at Bloomberg’s headquarters in New York. “That’s critical to companies looking to invest.”
Vancouver is ranked among global cities most at risk of a housing bubble for the second time this year as the cost of a typical single-family home surged to a record $1.6 million ($1.3 million), about 20 times the median household income. The seemingly relentless run-up has defied attempts to cool it, including a 15 percent tax on foreign buyers imposed by the previous, Liberal-led government last year.
“One tax in place isn’t going to fix the challenges that are there,” James said. “We’re looking at all options. All ideas are on the table to address both demand and supply.”
SHORT-TERM RENTALS
The province’s government expects to have a more comprehensive policy by February, when it presents its budget. James said potential options include tax reform to discourage short-term speculation on housing, and to close a loophole involving so-called bare trusts, which allow owners to cash out and new investors to buy in without paying property-transfer taxes. Province-wide rules for short-term rental operators such as Airbnb Inc. and Expedia Inc.’s HomeAway unit also may be in the works.
Vancouver introduced tighter restrictions on short-term rentals in July, including requiring hosts to obtain a business license and banning rentals of investment properties and basements. In a meeting with regional municipalities recently, a province-wide regulation was one of the biggest requests, James said.
“If not the top, it was one of the top issues that’s been raised by municipalities,” said James, who is also British Columbia’s deputy premier. “They want it.”
The government has merged municipal affairs, housing and transit under one ministry because “it just makes economic sense,” James said. Higher housing density needs to be promoted along transit lines, and municipalities should be encouraged to free up land for rezoning, she said. “It’s a good tool to have those three pieces linked.”
AFFORDABILITY CRUNCH
Premier John Horgan’s NDP had campaigned to make life more affordable for the average British Columbian -- pledges that helped end the 16-year rule of the Liberal Party, whose tenure coincided with surging property prices and stagnant incomes.
James acknowledged that the biggest pressure the administration faces from voters is to act immediately on housing. But with prices so far out of reach for most buyers, that won’t be easy.
“No one expects you can get to affordability within a year,” she said. “We want to develop a comprehensive plan that is long term and doesn’t create unintended consequences.”
--With assistance from Tiffany Kary and Erik Hertzberg
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