U.K. and Australia held up as models for Canadian policy
Bethany Lindsay
The Vancouver Sun
The impact of Vancouver’s infamously high real estate prices on the home-ownership dreams of young people could affect the Canadian economy for decades, according to one policy expert.
Scottish economist Duncan McLennan will be one of the international panelists participating in the City of Vancouver’s ReAddress conference on housing affordability later this month. He told The Sun that housing is about more than human rights.
“We’ve got to stop thinking of housing simply as some kind of
social service, but recognize that it’s a key thing to get right for any metropolitan area that wants to be a great city — and that’s what Vancouver is,” he said.
He said Vancouver’s skyrocketing real estate prices have allowed longtime homeowners to get rich while everyone else struggles. That’s created a growing wealth gap, and a divide between younger and older generations.
That could have consequences down the line. People in their 50s and 60s have had decades to pay off mortgages, freeing up income to put into their children’s education and retirement planning. Canadians in their 20s and 30s won’t be as fortunate.
“If they don’t become homeowners until they’re 40, the point at which they can pay for these other things really gets pushed further into the distance, so that I think it will have a potentially negative effect on savings by Canadian households in that time, and also on consumption,” he said. “I think the economic effects are not good from that process.”
To McLennan, that suggests governments may have a role in helping the younger generation become homeowners sooner rather than later.
“The first measures that have been undertaken recently to cool the housing market in Vancouver and Toronto by being more restrictive in the ability to take out mortgages, I think actually they act against the interest of younger people and make it more difficult for them to take out a mortgage while interest rates are still low,” he said.
Part of the issue in Canada, according to McLennan, is the federal government has the most flexible tax base while cities take the brunt of a lack of affordable housing.
“The governments that have the problems don’t have the resources,” he said. “That’s what Canada’s problem is: realigning the resources that accrue to the federal government back to deal with the problems.”
One way to do that might be to follow the examples of the U.K. and Australia, where the federal governments partner with municipalities to create city-specific deals for investing public funds into new housing developments.
McLennan added that governments in Canada could also do more to support non-profit housing societies.
The ReAddress conference, designed to explore ideas on improving housing affordability from cities such as New York, London and Sydney, Australia, runs Oct. 24 to 29. About 500 international and local experts on housing are expected to attend.
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