People who study BC’s hot real estate market are skeptical. The new federal rules announced Thursday will go a long way to making home ownership more affordable for residents of the province.
The Liberal government has made tackling sky-high housing costs across the country the centerpiece of its 2022 budget plan, pledging to double the pace of building new homes, creating a savings account for tax-sheltered first-time home buyers and a two-year ban on foreign buyers.
But Ashley Pirhonen, a 30-year-old tenant in West Kelowna, says she’s not sure any of the changes will bring her closer to homeownership.
“It seems that the [budget] is not for people like me who are unable to save to buy a house because our cost of living is so high,” she said.
Pirhornen commutes 45 minutes one way from West Kelowna to her job in Penticton because she is unable to find accommodation closer to her workplace. Between rent, gas and student loan payments, she says, she doesn’t have enough money left to save for a house.
“When your rent goes up 50%, it really eats away at the amount of money you have left.”
The highest rents in the country
British Columbia has some of the highest rental costs in the country. According to data from Rentals.ca, Vancouver and Victoria top the list of unaffordable rental markets with a one-bedroom unit in Vancouver costing an average of $2,239.
Even smaller cities like Kelowna and Prince George have seen their costs skyrocket in recent years as vacancy rates plummet in nearly every major city in the province.
Andy Yan, an urban planner and adjunct professor at Simon Fraser University, said that for most people struggling with affordability, the ban on foreign buyers was unlikely to make a difference – particularly because it includes exemptions for students, refugees and foreign workers, which he said created the loopholes for foreign investment to continue to find their way into the market.
“The problem in Metro Vancouver isn’t necessarily foreign buyers, it’s foreign money,” he said. “I think it’s a missing gap.”
Tom Davidoff, associate professor at UBC’s Sauder School of Business, said banning foreign buyers could chill some submarkets where buying abroad is a factor, but it was unlikely make a bigger difference.
Instead, he said the focus should be on taxing people who own secondary properties that are not part of the rental market, regardless of their nationality.
“Let’s compare [a Canadian] who owns a second home in a city dear to a foreigner who buys an apartment and then rents it out,” he said. “The foreigner who rents the apartment doesn’t really hinder affordability, but the Canadian with the second home does. “
In fact, a representative from Statistics Canada report found that less than 5% of Vancouver homes were owned by non-residents.
Prihonen pointed out that, for the most part, foreign ownership did not seem to be the problem preventing him from finding housing, but rather a lack of affordable housing supply.
“It really seems like overseas buyers are buying more luxury properties than starter homes,” she said. “We’re not really in the same market.”
To that end, the budget earmarked about $10 billion for various initiatives to increase the housing stock across the country.
This includes $4 billion for a housing acceleration fund to create up to 100,000 new units over five years.
But Tsur Somerville of the Real Estate Foundation of BC points out that means there’s only $40,000 of investment per unit, which he says won’t translate into new housing.
Jill Atkey of the BC Non-Profit Housing Association warned that the investment may only result in about 1,000 new homes in British Columbia at a time when the low-end rental market is rapidly disappearing.
“For every new unit the federal government invests in, we lose 15 units across the country,” she said.
One area that has received praise is the government’s promise to introduce a homebuyer’s bill of rights which would include a ban on the practice of forcing potential buyers to make an offer on a property without knowing what the others offer.
“This opportunity is timely and well suited to our market,” said Jeff King, CEO of the Real Estate Board of Greater Vancouver, in a press release this week.