“Housing affordability is a hot-button political issue, so it is not surprising that the B.C. government, facing an election in less than a year, has felt compelled to do something to dampen the fervor,” Dr. Sherry Cooper, chief economist for Dominion Lending Centres, wrote in her most recent report. “Time will tell how impactful the new tax will be, but one thing is certain: Housing in Metro Vancouver will remain unaffordable for most households.”
Vancouver has been plagued by affordability issues for years, with home prices on a seemingly endless upwards trajectory.
The average price in the Greater Vancouver area was $1,007,687 in June of this year, up 16.3% year-over-year.
“New listings are way down, new supply is constrained, and buyer euphoria seems to be suggestive of panic fear of missing out — all of which has made housing less affordable and far out of reach of most middle-class households,” Dr. Cooper wrote.
Vancouver seems to have taken the issue to heart – albeit in a controversial and, perhaps inefficient manor – with its recently implemented 15% tax on foreigners.
Many industry players have supported the move, arguing it could quell out of control prices.
Those hopes however, seem to be misplaced.
“RBC estimates that owning a single-detached home in the Vancouver area would require 120 per cent of a typical household’s income,” Cooper wrote. “In other words, unless the buyers have access to a huge downpayment (thanks, let’s say, to Mom and Dad), it is out of reach. Even condos are too expensive for average earners in Vancouver.”
The average Vancouver homebuyer won’t benefit from the city’s recently implemented tax on foreign buyers, according to one economist.