Calibrating the Vancouver Housing Market – What the Experts Advise?

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Vancouver Housing Strategy

Vancouver is in dire need to restate the housing strategy, as current projections have many flaws that are compelling the City to make more housing schemes than they need. Many housing experts have criticized this.

Previously in 2017, the council reacted to the affordable housing crisis of the city with a 10-year plan. This plan was focused on creating a more comprehensive provision of housing schemes, and to discourage risky demand, which acts as a catalyst to high pricing. The main objective was to make 72,000 homes. Also, they have aimed to accommodate 50% of households that have income slab lower than or equal to $80,000 per annum.

Many City Council Members including Ms Colleen Hardwick have questioned the 10-year plan of Housing Vancouver Strategy to construct 72,000 new houses all around the city. Their stance was that the population projection that was estimated as the addition of 158,400 in 10 years is flawed. They cleared that it is twice the historical growth rate if we see it according to the last census. They also mentioned that COVID-19 has impacted the whole scenario. So, drastic growth in the future is both improbable and impossible.

Vancouver Housing Market

A geography professor Dr David Ley at the University of British Columbia explained that practices depending on very high projections may result in far-reaching changes of the urban lifestyle that is what the city is already going through.

On another occasion, Ms Hardwick criticized that this housing plan will also result in high inflation because the demand for land and the construction sector will rise. Consequently, developers will be the highest beneficiaries. She explains that it is true that there is a shortage of houses for average income people. But due to current situation affordability will always be a question mark.

House Planning

In the pre-HVS era, based on census data of 20 years, every year average 4000 houses were built in the city of Vancouver. Yet, in 2016 alone, that is a year before HVS approximately 9800 units were started within the city. On the other hand, the population growth index shows that each year the city if Vancouver grows by 6000 people annually. Usually, the city considers 2 people as one household unit. So, with this perspective, even before the creation of HVS in 2017, Vancouver has already built beyond its capacity that is quite alarming. Based on these facts and figure, the making of HVS is questionable. We should not build more housing or start such initiatives like HVS when we already have them in abundance. Ms Hardwick further told in the interview that as they are already having three times more housing units that are exceeding the limit of housing that they need. And in her opinion, she elaborates that the only reason could be that these have built for the non-resident population in Vancouver City.

These all extra houses are the risky long-term investment by the investors. According to  2019 housing data it was found out that 46% of the condos are used as a secondary home, rented place or empty spaces.  Moreover, in Vancouver, many housings are owned by investors. The Condos Rental Study of the City of Vancouver between 2001-2009 revealed that investor ownership’s rate was 34.7% in the year 2001.

Taking into account the huge amount of ownership by investors, and not any trace of high immigrant’s influx Mr Yan, director City Program of  SF University states that to analyze the root cause of demand, it is needed to split up the projection and see where did it start. Also, search out the basis of these high numbers. Using this method it is possible to view behind the scene of this condition.

Vancouver Downtown Sunset

Ms Hardwick has enquired city-staff to justify the source of the projection. Yet, she is waiting for the real answer. Lately, Dan Garrison assistant director planning responded that the projection is not only based on population growth but it also includes the housing that is affordable to the average population.

According to Dr John Rose, a geography instructor at KP University, there were many issues with the data in projection before the outburst of the novel coronavirus. But now because of the COVID-19 crisis and its direct impacts has many implications on immigration, the growth rate of population, and the economy, which portrays that the HVS condition is getting more pressing and more questions are arising. All these factors are needed to be closely monitored and considered before further implementation of HVS.

Dr Rose adds that the goal of achieving affordable housing does not seem to be possible. There is a lot of going on between the lines. For affordable housing, you have to sell a huge portion of the housing to the highest bidders at high prices, which in itself is very challenging and after selling that you will use that money as a subsidy on the housing for making them affordable to the average population.

Ian Crook a philanthropist criticizes that the city is facing a huge crisis that is directly the outcome of the lockdown and ongoing COVID-19 pandemic. It is not the right time to give subsidies on the housing or starting projects like these when many other economic issues are arising and the city government should look into those as a priority.

Ms Murphy a property expert at B.C. housing also points out that authorities are pushing these very expensive and huge projects to give a small percentage of people to afford small housing units. However, this will result in a rise in land prices and rentals as the investors will buy housing at high prices in bids. So, a bad example would be set and will give rise to more inflation in the construction and property sector.

Mohamed El-Erian who is an Economist says that the current ongoing COVID-19 lockdown will produce market of a buyer in land and construction sector, remunerated by lessened earnings putting all the burden on the entire sector.

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Article References: Globe and Mail