When it comes to sa国际传媒’s shortage of affordable housing, you can’t accuse the governing New Democratic Party of not trying.
Since the BC NDP came into power in 2017, there has been a raft of new measures including the speculation and vacancy tax, housing targets for municipalities, short-term-rental rules, historic zoning changes and a forthcoming home-flipping tax, just to name a few.
But are the BC NDP’s measures working?
“Despite countless measures and additional paperwork and other requirements, we’re exactly where we started,” said Andrey Pavlov, professor of finance at Simon Fraser University’s Beedie School of Business.
Just prior to the 2017 election, John Horgan announced a BC NDP plan to build 114,000 new units over 10 years. According to Housing Minister Ravi Kahlon, 84,000 new homes have been added in sa国际传媒 since then via direct investment and policy.
But the 114,000 units promised by the BC NDP are not enough, said Pavlov. For example, sa国际传媒’s population grew by an estimated 162,729 from mid-2022 to mid-2023, according to BC Stats. Assuming an average household size of 2.4, the province would need about 68,000 new housing units just to keep up with one year’s population growth, let alone the accumulated shortage.
“We need at least 114,000 new housing units every year, not over a decade,” Pavlov said. The only way to come close to this level of new supply is to make it as easy and as safe as possible to invest in housing in sa国际传媒, he said.
“A first step would be to eliminate the excessive regulation, taxes and red tape that increase the cost and risk of housing investment,” Pavlov said. “Measures like the speculation and vacancy tax, the flipping tax, the short-term-rental ban and many others sound good on paper, but in reality they increase the risk of housing investment and, consequently, only worsen our housing shortage.”
Asked whether the BC NDP’s initiatives have made a positive difference in the aggregate, Kahlon told BIV that the speculation and vacancy tax has freed up more than 20,000 homes, and that housing starts have doubled from a decade ago.
“We continue to break records across the country with our historic amount of investment in affordable housing, so I would respectfully disagree,” he said.
More industry consultation desired
Some in the real estate industry say the BC NDP has good intentions but sometimes misses the mark. This requires more consultation, they said, so that government policies lead to better results, no matter who wins in October.
The BC NDP sometimes takes a dogmatic view and does not carefully review the unintended consequences of its policies, said Trevor Hargreaves, senior vice-president of government relations, marketing and communications at the British Columbia Real Estate Association (BCREA).
“I want to give the NDP credit,” Hargreaves said. “They’ve been bold and made a lot of changes. The Eby administration has tried hard to move the dial on housing affordability. But good intentions and bad processes only go so far.”
There should be a “permanent housing roundtable” for the provincial government to consult before enacting any new real estate policies, he added. His organization and others have made this request to the NDP for over two years with no luck.
“This is such a broad concern,” he said. “But they don’t want to be held to that degree of accountability. They want to be able to use housing policy for populist purposes and work out the details later.”
Kahlon says the challenge with a roundtable is deciding which stakeholders should or shouldn’t be included. “We engage with everyone, we have meetings with everyone and many of the policies are informed by that,” he said. “If you talk to most organizations, they’ll say that the engagement with them is thorough and often.”
As for his party’s perceived dogmatism and populism, Kahlon said the BC NDP’s record speaks for itself. “There is no jurisdiction in North America that is doing as much as us,” he said. “sa国际传媒 is leading when it comes to policy reform.”
Construction industry seeks prompt payment law
Representatives of the construction industry, meanwhile, are hoping the next government enacts prompt payment legislation, the industry’s top priority.
The goal of prompt payment legislation is to increase the cash flow of contractors and subcontractors by legislating mandatory payment terms. The legislation includes aspects like invoice specifications, payment timelines and dispute resolution provisions. Similar legislation is already in force in other provinces.
“I’m confident that all of the parties are paying attention to the work we’ve done over the past number of years as a broad group of stakeholders in support of bringing in payment certainty to sa国际传媒,” said Chris Atchison, president of the BC Construction Association (BCCA).
At an industry event in August, Rustad “did not make a firm commitment to advance prompt payment legislation but did note that he is very interested in making sure that there is a process that goes forward that ensures people are getting paid for work,” reported industry publication SiteNews.
The BC NDP is similarly non-committal. “Whether we would move forward [on this] is yet to be seen,” said Kahlon. “Certainly, the industry’s been making the case that something is needed, and we’re doing reviews.”
With the legislature no longer in session, the construction industry, which accounts for 10.3 per cent of the province’s GDP, must now wait until after the election—if not longer.
Conservatives have announced few specifics
To date, the BC Conservatives have not released key details of their housing platform. On their website, the party says it wants to “encourage a stable and predictable housing market. This means getting prices under control by promoting the development of new housing supply while cracking down on illegal money laundering that has inflated prices and facilitated criminal activity.”
So far, the party’s plan contains “a lot of what-ifs and not a lot of pre-defined policy,” said BCREA’s Hargreaves.
In a recent interview with BIV, Rustad criticized what he called the NDP’s “authoritarian” approach to zoning and densification. “The whole idea of densification is needed,” he said, “but Eby’s approach—with building multiple units on a single lot—doesn’t address parking, it doesn’t address traffic, it doesn’t address water and sewer, it doesn’t address everything else that needs to be done.”
Rustad also said that “pre-zoning” can help achieve “managed densification.”
“We want to work with municipalities to actually do pre-zoning as part of their official community plan, so that the pre-zoning for densification is done,” said the BC Conservative leader. “When somebody wants to come in and build, let’s say a duplex or multiple-unit building, it fits within that already-planned-out densification, and they don’t have to then go through the process.”
Kahlon said that the BC Conservatives would take the province backward. “I think all of the housing changes are at risk,” he said. “It’s going to put housing back generations.”
Economy a challenge for BC NDP
The outcome of the election may have more to do with the state of the economy than any one policy or piece of legislation.
“There’s ‘working’ and then there’s ‘good idea’,” said Thomas Davidoff, associate professor with the UBC Sauder School of Business. “It’s a little hard to tell if the NDP’s ideas are working because the economy is not conducive to the increase in supply that they have enabled.”
Davidoff, who has performed economic modelling for the Ministry of Housing, said elevated interest rates and a sluggish market for purchase have resulted in less construction.
Regarding the centralization of zoning, for example, he said the NDP’s efforts may not necessarily pay dividends until later. “The municipalities have to be dragged kicking and screaming, which is the point, but in a slow supply environment you don’t see the change because a lot of deals are on hold,” he said.
Regardless of which party ultimately wins, the sheer scale of the housing problem will remain challenging for the next government.
Vacancy rates in Vancouver have not improved, for example. Vancouver’s rental apartment vacancy rate was 0.9 per cent in October 2017, with an average rent of $1,308, according to the sa国际传媒 Mortgage and Housing Corp. Six years later, in October 2023, Vancouver’s vacancy rate was again 0.9 per cent, with an average rent of $1,828.
At the national level, the 2024 federal budget contains a strategy for 3.9 million new homes by 2031. SFU’s Pavlov told BIV that the federal goal will require $2 trillion plus the cost of land and infrastructure improvements.
For a sense of magnitude, the federal government estimates a total of $449.2 billion in budgetary spending from 2024 to 2025. In other words, the required housing investment is more than four times the annual federal budget.
Pavlov’s calculations assume a $500,000 construction cost per unit, a conservative estimate based on a $400-per-square-foot construction cost for a 1,250-square-foot unit. (Taller buildings and smaller units cost more, he noted.)
The ambitious federal goal will therefore require an enormous amount of capital from the private sector, which may be discouraged by an egalitarian agenda.
“Where’s that investment going to come from?” said Pavlov. “I think that’s a point that’s frequently overlooked.”
