The impact of Vancouver’s famously high real estate prices on the home-ownership dreams of young people could affect the Canadian economy for decades to come, according to one housing policy expert.
Scottish economist Duncan McLennan will be one of the international panelists participating in the City of Vancouver’s re:address conference on housing affordability later this month. He told Postmedia that housing is about more than just human rights.
“We’ve got to stop thinking of housing simply as some kind of social service, but recognize that it’s a key thing to get right for any metropolitan area that wants to be a great city — and that’s what Vancouver is,” he said.
He said Vancouver’s skyrocketing real estate prices have allowed longtime homeowners to get rich, while everyone else struggles. That’s created a growing wealth gap, as well as a gap between younger and older generations.
That could have consequences far down the line. People who are in their 50s and 60s now have had decades to pay off their mortgages, freeing up income to put into their children’s education and retirement planning. Most millennials in their 20s and 30s won’t be so fortunate.
“If they don’t become homeowners until they’re 40, the point at which they can pay for these other things really gets pushed further into the distance, so that I think it will have a potentially negative effect on savings by Canadian households in that time, and also on consumption,” he said. “I think the economic effects are not good from that process.”
To McLennan, that suggests that government may have a role in helping the younger generation to become homeowners sooner rather than later.
“The first measures that have been undertaken recently to cool the housing market in Vancouver and Toronto by being more restrictive in the ability to take out mortgages, I think actually they act against the interest of younger people and make it more difficult for them to take out a mortgage while interest rates are still low,” he said.
Part of the issue in Canada, according to McLennan, is that the federal government has the most flexible tax base while cities feel the real impact when there’s a lack of affordable housing.
“The governments that have the problems don’t have the resources,” he said. “That’s what Canada’s problem is: realigning the resources that accrue to the federal government back to deal with the problems.”
One way to do that might be to follow the examples of the U.K. and Australia, where the federal governments partner with municipalities to create “city deals” for investing public funds into new housing developments. He went on to say that governments here could also do more to support non-profit housing societies.
The re:address conference, designed to explore ideas on improving housing affordability from cities such as New York, Sydney and London, runs Oct. 24-29. About 500 international and local experts on housing are expected to attend.
Image may be NSFW.
Clik here to view.
