The Frontier Centre for Public Policy has today released Housing Affordability and the Standard of Living in Vancouver, a new report authored by Wendell Cox, a senior fellow with the Frontier Centre.
Mr Cox is an expert in land use and transportation policy and the co-author of the annual Demographia International Housing Affordability Survey, which has examined metropolitan areas in Canada, Australia, Ireland, New Zealand, the United Kingdom and the United States since 2004.
In this report, Mr Cox draws on evidence from the Demographia survey, and his knowledge of the role of housing affordability in poverty reduction, to make recommendations for Vancouver to address the severe deterioration in housing affordability that has occurred in the city in recent years.
Historically, Vancouver housing prices have been comparable with the rest of Canada. As late as 1971, the Census of Canada reported that the price of the average detached house in the Vancouver metropolitan area was only 3.9 times the median household income – close to the average of Calgary, Edmonton, Montreal, Ottawa and Toronto.
Since then, however, the land-use policies of Metro Vancouver and its predecessors have significantly reduced the land available for urban development. Consistent with economic theory and the experience elsewhere, the resulting scarcity in land supply has been accompanied by an increase in housing costs relative to income. In Vancouver’s case, the house-price increase has been among the largest for which international data are available.
In the 30 years to 2001, housing prices increased from 3.9 to over 6 times the median household income. Over the next decade, prices shot up even more dramatically, to over 10 times the median household income.
By 2013, the Demographia report showed that Vancouver’s housing affordability was the worst among all 85 major metropolitan areas in Canada, the United Kingdom, Australia, Ireland, New Zealand, Singapore and the United States.
The report also recommends that the city council and surrounding jurisdictions should focus on improving the standard of living in Vancouver and eradicating poverty by reforming a number of policies around housing affordability, land supply and infrastructure financing.
“Housing costs are the largest element of household budgets, so rising house prices can have a significant impact on the standard of living of the population – particularly for lower income households,” said Mr Cox.
Municipal government policies can have real and significant impacts on housing affordability and on the public’s standard of living.
“Municipal governments should commit to housing affordability as the first principle of urban planning to bring house prices back under control, and improve the standard of living for everyone in Vancouver,” Mr Cox concluded.
View the report here: http://archive.fcpp.org/posts/housing-affordability-and-the-standard-of-living-in-vancouver