The sa国际传媒 government has attacked the housing crisis from opposite ends of the spectrum, implementing a luxury tax on high-end homes and a surtax in Vancouver for foreign buyers. It has also committed $500 million toward affordable housing for low-income people.
Between those two points lies a middle-income housing-affordability crisis. It is a difficult problem, not easily resolved with tinkering at the provincial and municipal levels. All the more reason to begin working on major policy reforms. The national economy and Canadians鈥� quality of life are at stake.
The cost of housing is a national crisis, say Wendell Cox and Ailin He in sa国际传媒鈥檚 Middle-Income Housing Affordability Crisis, a report released in June by the Frontier Centre for Public Policy.
Housing prices in Greater Victoria have not reached the level of those in Vancouver, but this is still one of the most expensive places to live in sa国际传媒. As housing prices continue to climb, it is becoming increasingly difficult for middle-class families to live here. Renting is not an attractive option, especially with skyrocketing rents and a vacancy rate of less than one per cent.
The widening gap between the rich and the poor is unhealthy enough for society. When the middle class is pushed out, the opportunities to bridge that gap dwindle.
鈥淗igher house prices reduce the standard of living and constrain economic growth,鈥� says the Frontier report. 鈥淗igher house prices mean less home-buyer discretionary income (the amount left over after paying for necessities such as housing, food, clothing and transportation). Households have less income available for purchasing other goods and services, which can constrain economic growth and job creation.鈥�
Housing is the largest expenditure for most households. The more money that goes into paying the mortgage, the less money there is for discretionary spending.
鈥淒iscretionary income virtually defines a household鈥檚 standard of living or its poverty,鈥� says the report. 鈥淭herefore, it is important to keep middle-income housing affordable when seeking the objectives of a better standard of living and less poverty.鈥�
The rule of thumb is that the price of a house should not be more than three times a family鈥檚 annual income. But the report says house prices in sa国际传媒 have grown at a rate three times faster than incomes since 2000.
Vancouver鈥檚 house price-to-income ratio is 11:1, the highest in sa国际传媒 and second-highest in the world after Hong Kong. Victoria comes second in sa国际传媒 at 7:1.
While rising housing prices are often touted as an indicator of a robust economy, these ratios strongly hint at a housing bubble that could so easily burst.
鈥淭his could lead to similar catastrophic declines in housing values and severely disrupt people鈥檚 lives and damage the economy,鈥� says the report.
Even if the bubble does not pop, housing prices are hollowing out the middle class, the engine of the economy. It is harder for families to come to Greater Victoria, easier for them to go elsewhere in search of affordability.
The housing-price situation in sa国际传媒 鈥渋s a profound social and economic crisis that warrants serious and concentrated public-policy attention,鈥� says the report.
The province鈥檚 move to make more affordable housing available to the homeless and low-income families is welcome, but it and other governments should also focus on policies aimed at alleviating the housing crisis for ordinary families.
It isn鈥檛 just to protect the middle class. sa国际传媒 consistently records higher child-poverty rates than the national average, in some urban neighbourhoods reaching 50 per cent or more. The principal cause is unaffordable housing.
