Assessments of the Victoria housing market at the beginning of January show the average cost of real estate is either slightly decreasing or levelling off. Meanwhile, the rental market has shown that prices are unchanged but the number of vacancies in Victoria is increasing as more apartments are being built.
Vancouver has seen a more dramatic downward shift in the cost of housing, with some areas seeing downward spikes in average house pricing as high as 15 percent. However, the Vancouver rental market has been unaffected by these changes, with vacancy rates remaining low and prices unchanged.
This is a shift from several years in which house prices and rental costs continued to increase in both Victoria and Vancouver.
Overall, these trends are positive for any student who aspires to one day own a home. The cost of housing in the Victoria and Vancouver regions has increased so dramatically over the last decade that many young adults have entirely given up any plan of buying a house. These new trends can finally allow the current housing market to breathe and let in a new generation of homeowners into the market.
But these changing trends raise larger questions about the housing market. Why has it taken so many years of dramatic increases in the cost of housing before the market finally went back down? What steps, if any, have various levels of government taken to help lower the cost of housing? The situation has been completely unacceptable for years.
Part of the blame surely lies on the backs of local government officials, especially in Vancouver’s rental market, where mayors and councillors have ineffectively focused on opposing dense development, and the few projects that are approved won’t be completed for years.
A political stimulus is needed to tackle this problem head on, to halve the consultation process on affordable housing projects. Affordable housing needed to be built yesterday.
The governments in the Greater Victoria area also haven’t tackled the increasing cost of rent, except for the municipality of Langford. Langford’s council and mayor managed to manipulate the Urban Containment Boundary of the municipality in such a way that they could approve a ridiculous number of real estate projects. Apartment buildings, condominiums, and houses were approved with little oversight in Langford. Today, it is the most affordable area to live within the Greater Victoria area. Other municipalities in Victoria have completely failed to address the cost of housing.
The only government policy that has impacted the dip in the markets has been the provincial government’s Speculation Tax. Local governments have failed in their responsibility to future homeowners by allowing the cost of housing to skyrocket over the past decade.
On some level, this is to be expected. Local governments in Canada source the core of their funding from property taxes. This means local governments do not have an incentive to control the cost of housing in a way that benefits those seeking to purchase a home. If they did, they would be taking active steps that would decrease their future budgets, as property-tax revenues would decrease along with the cost of housing. Their only other solution to maintain their revenue would be to increase the rate of property tax, which is a politically unpopular move.
This perverse relationship de-incentivizes local governments from bringing down the cost of housing. It therefore shouldn’t surprise anyone that it was the Speculation Tax that led to the recent cooling in the housing market. One level of government had to intervene to correct the inaction of the lower level of government.
Again: affordable housing needed to be built yesterday.