Homes are "severely unaffordable" in all four of the B.C. cities that were included in a 325-city international survey of housing costs, and Vancouver’s affordability score was the third-worst of all.
The average home in Vancouver, according to data from the third quarter of last year, cost $602,000 — or 9.5. times the $63,100 median income of households in the city, according to the survey results released Monday by the Winnipeg-based Frontier Centre of Public Policy. Only Sydney, Australia, at 9.6 times the median income, and Hong Kong, at 11.4 times, scored worse.
With their housing prices quite a bit lower but their incomes a little lower, too, Victoria, Abbotsford and Kelowna were — in that order — uncomfortably close to Vancouver’s 323rd-place finish in the international rankings.
Victoria’s average price of $430,000 was 7.1 times the median household income of $60,900, resulting in a ranking of 297th out of 325. Abbotsford’s $402,000 average price made it 6.5 times the median household income of $62,300 and 297th in the rankings. And Kelowna finished 283rd with a median income of $57,500 that was 5.9 times the median price of $57,500.
The study pins the "severely unaffordable" label on any city with a multiplier of more than five — about 75 of the 325 studied, including Montreal and Toronto, but nowhere else in any part of Canada except B.C.
For a housing market to be rated as "affordable" the ratio of price to income can’t exceed three times. And in nearly half the 35 Canadian cities surveyed, it is either lower or very close to that mark. In Edmonton, for example, the multiplier is just 3.5, although its low figure is in part thanks to the very high median income of $88,800. And in Winnipeg, where people earn just a little less than in Vancouver, it’s 3.2.
The researchers who conducted the survey point out that you can’t blame things such as interest rates, or the federal mortgage rules that have recently been in the news for B.C.’s worrisomely high score. These factors are the same everywhere across Canada, yet many other Canadian cities remain affordable. For example, it costs just 2.3 times the median income to buy an average home in Fredericton, a small government-dependent provincial capital where incomes are nearly equal to those in unaffordable Victoria.
So the policy factors that drive prices too high in relation to residents’ incomes must be closer to home.
David Seymour, a senior policy analyst for the Frontier Centre, and his collaborator on the study, consulting demographer Wendell Cox of St. Louis, finger "politically inflated land costs."
"These land prices include the cost increasing influence of land supply restrictions (such as urban growth boundaries), excessive infrastructure fees and other overly strict land use regulations," they write.
In other words, the problem is not only in Vancouver, where everybody knows housing costs too much, but also in Victoria, Abbotsford, Kelowna and, almost certainly, in all of the other Lower Mainland cities that weren’t surveyed. And this problem is world-class, worse here than in most cities in many other developed countries.
But the solution, we ought not forget, can only be local.