UK expert shrugs off foreign investment, blames Canada for Vancouver housing crisis
Scottish housing expert says Vancouver’s tendency to blame the “other” – foreign owners – is misplaced in the city’s affordability crisis.
Canada needs to stop blaming “others” for its affordable housing crisis and invest more in cities like Vancouver, according to one international expert.
University of St. Andrews housing economist Duncan Maclennan was speaking on a rental market panel as part of the City of Vancouver’s ongoing re:address housing conference on Tuesday when the Scot poked a hole in the common narrative that the city’s housing prices are ratcheted up by offshore buyers.
“I have read some of the discussion of Chinese investment in Vancouver and I think it’s a classic example of othering, i.e. blaming someone else for what is actually a systemic problem within the Canadian housing system,” said Maclennan.
“That applies in Toronto and Montreal as well, the inability to respond to market pressures regardless of where they might come from.”
Like many jurisdictions, such as the United Kingdom and Australia, Maclennan says Vancouver began to see trouble in the 90s as federal governments were getting out of building housing and leaving things to the market.
Housing prices started outpacing income growth and people eventually realized there was money to be made in the real estate market, spawning a new class of small-time landlords who buy up several properties as investments, squeeze out other would-be buyers and put more upward pressure on prices.
Adding the investment component is what turns a housing boom into a housing bubble, Maclennan said.
Maclennan also had harsh words for how Canada as a country redistributes tax dollars.
It's the first time the agency has raised its assessment of the overall market to red. In July, the agency was waving a yellow flag.
“The Canadian context, more than any other context I’ve seen, is reinforced by fiscal imbalance,” he said.
Income and employment growth in cities is what currently drives tax revenue, which ends up in federal and provincial coffers.
But getting those dollars back from those levels of government, “whether for infrastructure or for housing, is much more politicized and complex in Canada than any other system I’ve seen,” he said.
“I happen to believe that in a world that’s increasingly dominated by how metropolitan areas perform, there has to be a much closer match of fiscal resources. I think that’s a fundamental imbalance of the Canadian system and it’s not dealt with well by the political system.”
The re:address conference, which is hosting 500 housing experts from around the globe, runs through Oct. 29.