COLUMN: Housing issue left alone too long

Renters and housing advocates must insist that work begin right away on building new rental housing.

The July 25 introduction of a 15-per-cent property purchase tax on foreign buyers by the provincial government surprised many observers and shocked the real estate industry.

In particular, foreign buyers with transactions in progress were caught in a dilemma. If they were able to move the completion date up, they could avoid the tax. Some did so. Others walked away from signed contracts, forfeiting deposits which in some cases were substantially lower than the tax bill would have been.

Philip Dumoulin of Sotheby’s International Realty in South Surrey said one realtor lost three buyers and a fourth asked for a referral to Toronto, planning to buy there instead of in the Greater Vancouver area.

Foreign buyers have had less direct impact in Surrey than in some other parts of Greater Vancouver, such as the City of Vancouver, Burnaby, Richmond and areas of the North Shore. However, there have been a significant number of such buyers in South Surrey and White Rock, and it is likely some also bought homes in Fraser Heights, which already has a sizable population of Asian background.

As happened in the late 1980s and early 1990s, it isn’t just foreign buyers who influence property prices in Surrey. At that time, many buyers from Hong Kong bought homes in Vancouver to hedge their bets, not knowing what the pending jurisdictional takeover of Hong Kong by the Chinese government would mean.

Many people who sold properties to Hong Kong buyers at that time bought homes and moved outside Vancouver. A significant number came to Surrey, Delta and White Rock, and that boosted prices here. This came after a prolonged slump in the real estate market, caused by 20-per-cent interest rates in the early 1980s and a lengthy economic downturn.

A similar thing has happened in this boom. In recent months, real estate prices in virtually all Surrey neighbourhoods have increased sharply. Detached homes in particular have been in demand.

While prices in many parts of Surrey are substantially below prices in most areas of the Burrard Peninsula, they are still much higher than they have ever been. Even with low interest rates, this makes owning a home a challenge. If interest rates ever rise, there is a high risk of many homeowners defaulting.

The 15-per-cent property purchase tax is designed to crimp demand, not just from foreign buyers, but from people who are relocating to other areas of the Lower Mainland. A chilling of demand is long overdue.

What is equally important in any discussion of housing supply and demand is recognition that the rental supply needs to be increased. With real estate prices so high, more people have no choice but to remain renters. This puts upward pressure on rents.

The provincial government has put $75 million into a fund to build rental housing and also promises that revenues from the new higher property purchase tax will go into this fund. This commitment to creating new rental stock is important.

Renters and housing advocates must insist that work begin right away on building new rental housing. Local governments need to identify sites where rental housing can be built quickly and fast-track approvals.

Housing market challenges were left to their own devices for too long and the situation got out of hand.

Frank Bucholtz writes weekly for The Leader.

 

Just Posted

Over-budget bids cause delay of four Surrey school projects

Two projects have gone back out to tender, two awaiting ‘revised budget approval’ from Ministry of Education

Fees ensure patients have access to parking at SMH, FHA says

Fraser Health Authority hasn’t heard yet from city hall about pay parking at Surrey hospital

Free hospital parking a non-starter in White Rock

City considering task force to look at parking generally – Walker

Surrey memories: How the ‘IGUISBCSIR’ Facebook page became a hub for anecdotal history

Former Whalley resident Wes Mussato launched the group in 2011, 11 years after he’d moved to Ontario

VIDEO: B.C. legislature clerk, sergeant at arms suspended for criminal investigation

Clerk of the House Craig James, Sergeant-at-arms Gary Lenz on administrative leave

Former NHL player and coach Dan Maloney dies at 68

Maloney coached the Toronto Maple Leafs and Winnipeg Jets

Ex-MSU president charged with lying to police about Nassar

Lou Anna Simon was charged Tuesday with lying to police during an investigation

Police aim to prevent retaliation after Hells Angel found dead under B.C. bridge

IHIT confirms Chad Wilson, 43, was the victim of a ‘targeted’ homicide

Otter makes a snack out of koi fish in Vancouver Chinese garden

Staff say the otter has eaten at least five fish

Police looking into two more incidents at private Toronto all-boys’ school

Police and the school have said two of the prior incidents involved an alleged sexual assault

B.C. lumber mills struggle with shortage of logs, price slump

Signs of recovery after U.S. market swings, industry executive says

25% of Canadians still won’t say they use pot, survey says

Statistics Canada poll says Canadians on average were 18.9 years old when they first tried pot.

Canucks’ 50/50 jackpot expected to surpass $1 million

The guaranteed prize for one lucky winner will be $500,000 minimum when Vancouver hosts LA Nov 27

Most Read