Almost a year since the NDP government started mounting a major affordability intervention to cool down real estate prices, the market isn鈥檛 doing what was hoped.
The entire thrust of the multipronged attack on runaway prices is to curb the hikes in the lower end of the market, where affordability was an acknowledged crisis.
The real-estate market is doing different things. But the key goal of relieving price pressures in that low- to mid-market, where regular wage-earners want to live, hasn鈥檛 been met yet.
Some of the measures, such as the speculation tax, have yet to kick in. And it鈥檚 only been nine months since the first throne speech that signalled their intentions. But the previous B.C. Liberal government also took a belated run at stepping into the market, with the foreign-buyers tax in Metro Vancouver.
So it鈥檚 been government policy for two years now to curb prices to some degree. Values and sales figures in different niches have moved, but there鈥檚 no dramatic drops in condo or starter single-family home prices.
There鈥檚 nothing in the B.C. Real Estate Association鈥檚 forecast, released last week, about price reductions. It expects a nine per cent drop in sales this year. Rising mortgage rates and continued high prices were cited. The expansion of the foreign buyer tax and 鈥渙ther policies aimed at taxing wealth鈥� send negative signals, it said.
It terms the shortage of homes on the market as 鈥渃hronic.鈥� The association said Greater Victoria鈥檚 number of active listings earlier this year hit a 35-year low. It鈥檚 increased since then, but the local market 鈥渞emains significantly undersupplied with market conditions remaining tilted in favour of home sellers.鈥�
Paradoxically, new-home construction has never been higher across B.C. Builders have responded by doubling the number of units under construction in the past two years, the report said. 鈥淗owever, the inability of home builders to supply the market in a timely way has led to rapidly rising home prices.鈥�
Moderation of prices is expected, but it could be two years or more out.
The Victoria Real Estate Board鈥檚 latest snapshot of the market shows the number of active listings at the end of May is higher than the previous May. But the number of sales dropped 25 per cent in May compared to the same month last year. It鈥檚 because there are one-third fewer homes for sale under $750,000.
That鈥檚 the general market where government wants to see a big uptick in supply, which would theoretically lead to lower prices.
Instead, there is pressure from increased competition for a smaller number of homes. The board is a critic of NDP housing moves, so its analysis of the trends reflects that. It said there is a big jump in the inventory of more expensive homes, arguably because of the NDP鈥檚 new taxes. The board said the taxes are not doing what they were designed to do 鈥� increase availability of affordable housing.
鈥淵ou may find more flexibility if you are shopping for a multimillion-dollar estate in certain areas. You may be in for a competition if you're shopping for a lower priced home or condominium.鈥�
That鈥檚 pretty much of the opposite of the stated goal.
Benchmark prices for single-family homes and condos were both higher than they were a year ago, in Victoria and on the rest of 麻豆传媒映画Island, as are benchmark apartment prices in Metro Vancouver.
The NDP鈥檚 first throne speech in September mentioned housing prices right off the top, saying the situation is as 鈥渁stonishing as it is unacceptable.鈥�
That set a tone of urgency, but the government later started begging for time, saying the crisis can鈥檛 be fixed in a single budget: 鈥淚t will take years of sustained action.鈥�
They started with a blizzard of announcements 鈥� major commitments for social housing, a new speculation tax, hiking the foreign buyer tax to 20 per cent and expanding the coverage area, plus increasing the property-transfer tax and the school tax on homes over $3 million.
Maybe it鈥檚 too soon to expect price drops, but the prices haven鈥檛 even stabilized. Benchmark prices for houses and condos in Greater Victoria last month are now about five per cent higher than when the NDP was sworn in last July, according to industry statistics.
The people whom the government is keen to help are getting left further behind.
