November 18, 2022 Swapping of the Guards and Shifting Real Estate Policies
This past month has seen a fair amount of change in government bodies both municipally and provincially. With a municipal election that saw a major shake-up take place and the confirmation of a new provincial NDP leader and Premier, the Vancouver area is in a state of change and flux. Here, President of MLA Canada, Ryan Lalonde, and Executive Vice President of Sales and Marketing, Suzana Goncalves, look at the recent governmental happenings and what they mean for the real estate industry at large.
New Vancouver mayor takes office
“Part of the challenge that faced Vancouver’s previous Council was that there was no clear consensus among council members – the way our mayoral system is set up means that their vote is only as powerful as the council beside them. Now, with a super majority, Vancouver council can move and lead in clear direction over the next four years.” – Ryan Lalonde, President, MLA Canada
Ken Sim of the ABC Party defeated outgoing Mayor Kennedy Stewart in Vancouver’s mayoral race, turning the tables after narrowly losing to Stewart in the election of 2018. In addition to winning the seat of mayor, every member of Sim’s ABC Party won a seat on Vancouver’s City Council, meaning the party now has a majority on council – something Stewart’s Council had not obtained. ABC was elected on a few key platforms which are likely to impact our industry over the four years. The party promised to increase police presence in the city, provide additional mental health funding, and streamline permitting processes for new developments. Sim has also pledged that he does not plan to introduce any further major changes to the Broadway Plan, the Vancouver Plan, nor the proposed UBC Skytrain extension, and will instead be supporting them vigorously moving forward.
All of these plans were created to tackle key issues facing Vancouver, and their particulars were not always universally agreed upon. However, given the amount of time, energy, and public consultation allocated to these land use strategies in the past, it is positive that these projects can move forward without additional delay or debate around questioned future changes. As MLA Canada’s President Ryan Lalonde summarizes, “part of the challenge that faced Vancouver’s previous Council was that there was no clear consensus among council members – the way our mayoral system is set up means that their vote is only as powerful as the council beside them. Now, with a super majority, Vancouver council can move and lead in a clear direction over the next four years.”
Provincial and Federal Changes
“I think we really need to distinguish between policy that is really aimed at the core causes of issues in our industry, versus band-aid solutions that make us feel like political efforts are being made at the expense of honest efforts addressing the issues,” – Ryan Lalonde, President, MLA Canada
British Columbia received a new Premier when David Eby was confirmed as the new provincial NDP leader after running unopposed following the disqualification of his only opponent. Notably, Eby was previously the housing minister and has spoken about the challenges facing the real estate industry in the past. He comes to office with many ideas for new housing policy, including the stand-out proposal of a flipping tax, which would create an additional tax on any homes sold after being held by one owner for less than two years. While this policy sounds impactful in nature, its actual effect on the ground may be minimal. It’s quite debatable if price appreciation in our market is really being primarily driven by pure speculation and a select group of ‘flippers’. Appreciation may instead be a reflection of the decades-long undersupply of housing in Vancouver, hampered by difficult, long, and costly permitting processes. “I think we really need to distinguish between policy that is really aimed at the core causes of issues in our industry, versus bandaid solutions that make us feel like political efforts are being made at the expense of honest efforts addressing the issues,” shared Lalonde.
On June 23 of this year, the Parliament of Canada passed legislation the Prohibition on the Purchase of Residential Property by Non-Canadians Act. This law is set to come into effect on January 1 of 2023. On paper, it’s meant to curb foreign pressures in the market and reduce competition for local buyers. However, in practice, the ban carries a very narrow target, covering only a small portion of the people in Canada who might consider themselves “foreigners.” Those with permanent resident status and temporary residents, such as students and people on work visas, are exempt under the Act. Looking at the numbers, those populations account for the vast majority of demand for housing from non-Canadians. In contrast, historically low interest rates and lack of supply have been identified as the key factors driving price appreciation and competition. Ultimately, additional support is required at all governmental levels if we seek to address the many housing issues being experienced across Canada and specifically within Vancouver.
