As reported in Business in Vancouver housing prices in Metro Vancouver are not doing a southern retreat anytime soon, despite any policy interventions at the provincial or municipal level. The president of the Royal Lepage Realty Company describes it this way: “Attempting to use public policy to steer property prices in huge, rapidly growing cities like Toronto and Vancouver is like a tugboat trying to turn an ocean liner. Consistent, measured policy can have a positive impact. Just don’t try to turn the market on a dime or you risk losing the ship.”
Does supply and demand always triumph policy? Low inventory in Metro Vancouver means house sellers can ambitiously price houses, with prices expected to increase by five per cent in 2018. In the long-term prices may be more stable because of new stricter federal rules for people applying for mortgages due to be enacted on January 1.Forecasts suggest that the average sales price for a house in Metro Vancouver will rise to $1,353.924. This compares to a nationally expected price increase of 4.9 percent. And the average sale price of a house in the rest of Canada is less than half the Metro’s average sales price at $661,919.
Meanwhile on December 12 the City of Vancouver Mayor and Council increased the hike on annual property taxes from a recommended 3.9 per cent in the report to a “last-minute” increase of 4.24 per cent. This extra increase of over two million dollars in revenue as reported by Global News is for “housing initiatives and social grants” but insiders note that the amount is structured to be spent entirely at the discretion of Council. It is also a new precedent for a Council to increase property tax expenditures beyond that reported at the last-minute with no preceding public discussion or process. This will surelybe part of the fodder for the municipal election this Fall.
Council has increased property taxes above the level of inflation, and these taxes have increased by 8.1 per cent in two years. Council has also increased utility rates which are charged separately as well as garbage collection rates and a new charge for “street cleaning” of $19.00 per unit.
There is already unfortunate rhetoric with elected officials sparring about the last-minute increase in the 1.4 billion dollar budget. This is being debated not from an economic standpoint of accountability but in terms of the politics of housing affordability and racism. It’s starting to feel a lot like the 2018 municipal election year.