Blame politicians for Metro Vancouver’s housing price crisis

More analysis by David Ley on the roots of Vancouver’s housing prices (likely some similarities in Toronto’s overheated housing market although the pressures likely come from a more diverse group):

Canadian politicians, keen to stimulate B.C.’s economy, are responsible for creating the conditions that created Metro Vancouver’s housing affordability crisis, according to a new study.

Politicians decided to “reboot a troubled regional economy through an infusion of activity from the growth region of the Asia Pacific,” UBC geographer David Ley says in a peer-reviewed paper published in The International Journal of Housing Policy.

Largely as a result of governments’ efforts to attract wealthy immigrants and investment from East Asia, “house prices have risen rapidly and the detached housing market is now unaffordable to most Vancouver residents,” writes Ley.

Given that federal, provincial and municipal governments have shown a “minimal response” to Metro residents’ housing difficulties, Ley concludes most politicians have accepted that astronomical prices and mortgage debt are just the “collateral damage” from expanding the B.C. economy.

One of the federal government’s key policy tools for attracting Asia-Pacific money to Metro Vancouver real estate was the business-immigration program, says Ley, a leading expert on how the world’s “gateway” cities are changing because of high in-migration.

The program, which gave preferential treatment to wealthy migrants, proved extremely popular in Hong Kong and Taiwan in the 1980s and 1990s and in Mainland China since 2000.

More than four out of five of the affluent people who took advantage of Canada’s business-immigrant program have arrived from Mainland China, Hong Kong and Taiwan, Ley found.

And roughly 200,000 of them moved to Metro Vancouver, where they account for almost nine per cent of the population, Ley estimates in his study, titled “Global China and the making of Vancouver’s residential property market.”

Repeated government trade missions to Asia in recent decades also effectively generated East Asians’ desire to invest in Metro Vancouver real estate, where Ley says deregulation meant local citizens would have virtually no legal protections from runaway housing costs.

Vancouver’s Expo 86, which took shape during the 1980s’ recession as a transportation fair, was a key event in Canadian governments’ strategy to market the city to Asians, Ley maintains.

The fair’s promotional power for enticing Asian money to Vancouver real estate, Ley said, boosted even higher when B.C.’s Social Credit government sold much of the Expo lands, at a low cost, to Hong Kong’s richest man, billionaire Li Ka-shing, owner of developer Concord Pacific.

The huge volume of Mainland Chinese multimillionaires who are coming to Metro Vancouver to buy property is out of proportion to the city’s relatively small size, Ley says.

“Vancouver, the closest major city to East Asia and with a high quality of life, is the most popular destination, especially for the wealthiest investor newcomers,” the vast majority of whom concentrate on real estate.

Source: Blame politicians for Metro Vancouver’s housing price crisis