Today in the legislature I rose to question the Minister of Finance as to what steps, if any, government is taking to ensure that Metro Vancouver’s potential housing bubble doesn’t burst and that housing remains affordable in the region. I further inquired as to what plans the minister has to gather data to ensure that future decisions and policy development are informed. Earlier in the day I introduced a Private Members’ Bill that would provide government with a tool to begin measuring the impact that speculation is having on affordability in Metro Vancouver.
Below are the text and videos of my speech and the Minister’s response.
A. Weaver: Earlier this year we learned that the U.S. short-sellers are betting on a Canadian housing crash, calling it an accident waiting to happen. One article quoted a high-profile U.S. short-seller who described the Vancouver housing market as “a mix of money laundering, low interest rates.” And he went on: “A house is something you live in, but in Vancouver you guys are trading them like penny stocks on Howe Street.”
Government often points to global forces as the main reason we need to be so careful and deliberate with our economic management. I’m left wondering: where is the careful and deliberate action to ensure that Metro Vancouver’s housing market doesn’t become the next housing bubble?
More and more British Columbians are taking on bigger and bigger mortgages as housing becomes less affordable. The economic consequences of a burst housing bubble would be profound.
My question to the Minister of Finance is this. Can he provide this House with an update as to what actions, if any, his government is taking to ensure that Vancouver’s housing bubble doesn’t burst?
Hon. M. de Jong: To the member, the first thing I can do, perhaps surprisingly, is validate for him the interest, the curiosity, at times the fascination, that Americans have for the Canadian real estate market, the Canadian housing market, and that includes certainly the Vancouver market. That comes up frequently in the discussions we have from them.
I think it derives in large measure from their own experience and the trauma that they suffered after 2008. I think, further to that, it derives from the belief that if it happened there, it is destined and, therefore, must happen elsewhere.
What I tell them is this. I’ll respond, and I’ll tell the member and the House what I say to them. You do have to understand that there are some fundamental differences. The levels of equity that are involved in home ownership in British Columbia are, on average, very, very different than American markets. The rate of default and arrears thus far is very small, and the general stability of our banking system is different.
Now, I don’t say that at all to diminish or dismiss the concern, but this has been a high-value real estate market for a long, long time. What the government is doing is examining measures that may encourage first-time homebuyers to enter the market. We are, as well, through B.C. Housing, working to gather more information and more data. And I’m alive to the private member’s bill that was tabled today. We are also seeking to work with local governments to address issues around density that are a key part of the puzzle of addressing housing affordability.
A. Weaver: Thanks to the minister for his response there.
We’ve also recently heard from the Chinese consul general in Vancouver, Ms. Liu Fei, who suggested that the blame for the situation lies with “officials who monitor buyers, sellers and real estate developers.” She goes on to say: “People are blaming the buyer. It’s the wrong direction. I mean, the regulation here, nobody’s playing the role.”
Her point is that government must ensure that housing remains affordable and the bubble does not burst. Now, the first step towards formulating good housing policy is to ensure that the necessary information is available for analysis. For example….
Madame Speaker: A question.
A. Weaver: A question, I have. It’s a key question. Is the bare trust property transfer tax loophole that I have bought up several times here….is it actually incentivizing the speculative market?
My question then to the minister is: instead of rhetorical speculation contained in the reports that government released earlier this year, will the Finance Minister provide British Columbians with an outline of what data it plans to collect and analyze to determine what action is necessary to ensure that people retain access to affordable housing in Metro Vancouver, what plans does the minister have…?
Madame Speaker: Question.
A. Weaver: What plans does the minister have to gain and gather data to ensure that decision and policy is informed?
To the member, I must first of all confess that officials representing the government of the People’s Republic of China may have an affinity for centralized control and management that I do not share. But be that as it may, I think there is value in gathering additional data, which is why I’m pleased the Minister Responsible for Housing, through B.C. Housing, is working with agencies to gather additional data.
I mentioned earlier some of the other steps that the government has taken — I do believe, matters relating to density. I can provide the member with data and statistics about the average price of housing in Vancouver, which is actually lower than many people think. You can still purchase a home in Vancouver for under $400,000. About 30 percent of the homes that are exchanged or sold are sold for less than that.
I think that a big part of this is driven by the general economic circumstances, and if….
Madame Speaker: Thank you, Minister.
Hon. M. de Jong: Madame Speaker, since I don’t expect I’m going to get a question from the official opposition about the state of the economy or the public accounts that were tabled, I will take this opportunity to advise the House what people are saying.
Madame Speaker: Thank you, Minister.
Hon. M. de Jong: The national bank says B.C.’s economy is relatively buoyant, the budget is balanced, and the debt burden is relatively low and falling.
Madame Speaker: Minister.
Hon. M. de Jong: Little wonder B.C. is leading the way in Canada.