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In one of Canada's hottest housing markets, how the major parties are going to offer a leg up
As housing prices continue to rise on Vancouver Island and elsewhere, housing affordability has become a major topic of contention in the upcoming federal election.
From limitations on foreign buyers to government-built affordable housing to tax incentives for buyers, the parties have all offered a different selection of promises to address the problem.
To prepare you for September 20th, Capital Daily breaks down the housing issue and the parties’ major points with Alex Hemingway, senior economist and public finance policy analyst at the BC office of the Canadian Centre for Policy Alternatives.
This article draws on information first published in the Capital Daily podcast. Click here to listen and subscribe.
Hemingway says there are three major pillars that need to be addressed to solve and deflate the housing crisis: increase public investment in non-market affordable housing, increase the overall supply, and acknowledge the need for affordable housing by either lowering or freezing prices for some time.
With that in mind, the Liberal platform contains a mix of policies that inflate and deflate demand. The party has proposed a temporary ban on foreign buyers, for example—a policy that they believe would help control prices.
In terms of supply, Hemingway finds that there is no clear vision or target for expansion of the public non-market housing investment.
“There is an ambitious target of 1.4 million homes for overall supply, but it's quite short on details in terms of how these specific planks of the platform would get from A to B on that front,” he added.
The Liberals also have proposed to make the first-time homebuyer incentive more flexible. Policies like the first-time homebuyer incentive make it easier for people to invest more money and get into the market, but that can have the perverse effect of further inflating housing prices.
“We're in this supply-constrained environment,” Hemingway said. “The bigger mortgages people can bring to the table, the more tax credits and subsidies of different kinds they are able to bring to the table. That's going to lead to bidding up housing prices.”
For Hemingway, while this solution allows a few more people to join the housing market, the overall effect is detrimental, especially for those still on the outside.
Esquimalt–Saanich–Sooke Liberal candidate Doug Kobayashi told Capital Daily he is reluctant to see housing prices drop, however. (A profile of that riding will be published in the coming week in Capital Daily.)
“You can’t, as a government, artificially come in and say, ‘We’re going to just drop the prices,’” he said. “The person that just bought their house yesterday is going to lose the shirt off their back.”
One standout point in the Liberal platform for Hemingway was the housing accelerator fund. The plan flags an important municipal issue of using permitting times and inclusionary zoning programs to speed up housing supply. But the Liberal platform is not clear on how it would carry out this part of the plan.
“It’s good in theory,” Hemingway said. “But [zoning and permitting are] outside of the federal jurisdiction, and how you get from A to B in terms of influencing those municipal decisions is not terribly clear in the platform,” he said.
Though they lack a full plan for housing, the Green Party says they will declare a national housing affordability and homelessness emergency. This would establish a national moratorium on evictions and residential assistance.
The platform, to be released next week, is expected to include support for the construction of affordable housing and rental-purpose units.
Harley Gordon, who is running for the Greens in Esquimalt–Saanich–Sooke, says the platform will also advocate for investing in transit in order to help communities densify along transit corridors, and funding First Nations to address housing needs. (Gordon has written for Capital Daily in the past.)
The Green Party candidate for Victoria, Nick Loughton, told Capital Daily he is in favour of nationwide rent control.
Hemingway, while not entirely familiar with the Green Party’s housing ideas, shared that he believed it was correct, and important, to characterise the housing crisis as an emergency.
In terms of the Greens’ proposed federal empty home tax, Hemingway is all in favor of it.
“We shouldn't see homes sitting empty during a housing crisis, but it's not ultimately going to be at a big enough scale to reverse the ... crisis that we're in. So that's going to be the case of any given policy. It's helpful, but it's not going to do the job on its own.”
A major point in the Conservative housing plan is the proposal to build a million homes over three years, which according to Hemingway’s calculations would increase supply by about 33%.
“That's a sensible thing to try and do, we do need to increase overall supply, but a big component of that has to be investment in public non-market housing. And that's really absent in the Conservative platform,” he said.
The party would also encourage cities to densify near transit routes, adding even more supply.
On the demand side, Victoria Conservative candidate Hannah Hodson told Capital Daily housing in Victoria will always be in high demand. “The South Island is a very attractive community, people want to live here,” she said. “But there needs to be affordable housing within the community.”
Hodson wants to see more purpose-built rentals, which is part of the Conservative platform.
Similar to the Liberals, the Conservative foreign-investor tactic is to ban buyers who don’t live in Canada for two years. Instead, they encourage investment on the rental side of the market.
Other ideas the party proposes are additional support for new buyers, such as changes to the stress test and insurance requirements. But coinciding with the proposed Liberal policies, one likely result would be further inflation of housing prices.
“Ultimately what that's going to accomplish, that approach of just squeezing a few more people on the ladder, is increase the divide we have between a big segment of the society that has their chips down on housing,” Hemingway says.
While the Liberal and Conservative parties have promised millions of homes through their platforms, the NDP have a more modest goal of building 500,000 homes over a 10 year period.
Hemingway points out that this target, while different in scale, is also distinct due to its specific focus on affordable housing. One detail from the plan is a fast-start fund to support co-op, social, and non-profit housing in particular.
“I'm going to give some credit here, this would be a major increase in housing investment of this kind. But again, I'm going to say that on the scale of what's needed, it's not enough,” he said.
Research from the BC Canadian Centre for Policy Alternatives suggests that to support Metro Vancouver alone in the housing crisis, about 10,000 units of non-market affordable housing would be needed every year. With this in mind, Hemingway suggests that a lot more push is still needed on this front.
The NDP also proposes a tax of 20% to limit foreign buyers, rather than a ban.
To Hemingway, this is a blunt method of limitation that would dissuade buyers, but also work in creating some additional revenue.
Victoria NDP candidate Laurel Collins told Capital Daily that she wants to see “an end to the speculation fuelling high housing prices,” in Victoria, and the party has promised to “crack down” on speculation and money laundering in the housing market.
Another proposal in the party’s platform is the idea to introduce a 30 year mortgage and to double the homebuyers tax credit. Which Hemingway adds, in a similar fashion to ideas proposed by the Conservatives and Liberals, will help some enter the market and further divide others.
Hemingway addresses that there are many issues or solutions federal parties have yet to address or have not provided enough details in how they’ll address.
One of which, he mentions, is to provide a means of addressing zoning issues that reserve city land for the most expensive type of market housing: detached, single family homes.
A commonality Hemingway finds between all of the housing platforms for the federal parties is a lack of detail on how they would implement the policies, some of which sound good but could be interpreted in many different ways. He adds that given the scale of the housing crisis, the parties have some good ideas but that there is a lack of vision in their platforms.
“There are things we can do and it's a question of whether renters, millennials, and people of all ages on the outside of this housing market can come together and get organized to pressure all the parties to increase their offer when it comes to genuinely addressing the housing crisis,” he said.
As the election inches closer and closer, Capital Daily continues to provide answers and analysis on federal parties and the South Island’s candidates to help prepare for the big day. Keep an eye out for our profile of your riding in the coming weeks.