In another sign of how overheated the Vancouver housing market has become, the Real Estate Board of Greater Vancouver reports that the benchmark price of a home in the Metro Vancouver area is now over $1 million for the first time.
Since July of 2016, the price is up $8.7%, now standing at $1,019,400. The benchmark price for detached homes is now $1.6 million, while the benchmark price for attached properties and apartments is $763,700 and $616,600 respectively.
According to the report, sales were down 8.2% from last year, but as mentioned above, prices are still rising.
As noted by BNN, this is the 1 year anniversary of the 15% foreign buyers tax in B.C., meant to reduce the number of foreign housing purchases. Clearly, it hasn’t been enough.
Increase the foreign buyers tax, remove land-use restrictions
There are two steps that should be taken in the Vancouver market. First, the foreign home buyers tax must be increased. Something around 40% to 50% would be a stronger deterrent to foreign speculators – ensuring Canadian citizens have better housing access.
Second, land-use restrictions aimed at preventing sprawl have artificially constrained housing supply. Lifting those restrictions would help supply and demand balance out – reducing prices, and further improving housing access.
Unfortunately, most political parties are beholden either to the environmental movement – which wants the land-use restrictions (which benefit the elites by keeping prices high and screwing over working class and middle income people), or the globalist elites – who want foreign millionaires to be able to buy up homes anywhere in the world.
While the housing market will certainly come down regardless of what actions the government takes, the aftermath of the decline, and whether foreign speculators and restricted supply cause another bubble, is entirely dependent on policy choices.