New report shows affordability crisis deepens, blames foreign investment



A study released yesterday shows that Vancouver’s affordability crisis is deepening. The study, released by BMO Capital Markets, shows that Vancouver’s unaffordability score (a ratio of median house price to median household income) has increased to 11.2.

Affordability is defined as a ratio of 3, meaning that the median house in Vancouver is almost four times the affordable rate.

In 2009, Vancouver scored 9.3 on Demographia’s annual affordability report, making it the most unaffordable city in the world out of 272 studied. In 2010, Demographia showed that Vancouver’s unaffordability score increased to 9.5, with only Hong Kong and Sydney competing for most unaffordable spot out of 325 global cities studied. BMO’s report suggests that Vancouver housing prices have spiraled further out of control.

The report states: “Vancouver’s house prices have nearly tripled in the past decade, spiralling beyond the reach of most first-time buyers or non-lottery winners.”

The report suggests that “land-use restrictions” and “high quality-of-life rankings” attribute partly to high housing costs, but that these factors are not enough to explain the “unsustainable” high prices. The report suggests that foreign investment, particularly from China, is driving the speculative housing bubble.

How do we interpret the BMO report?

It is true that capital accumulation both within and outside Canada is being “sunk” into the Vancouver housing market. It is also urgent that mechanisms be implemented to control housing prices, such as, but not limited to:

  • empty condo and unused FSR taxes
  • speculation taxes, including new land-transfer taxes
  • limitations on number of units owned per individual or organization
  • creation of a public land commission
  • reactivation of the City’s public housing authority
  • new public revenue sources to subsidize housing vouchers, as in Toronto
  • That said, it is important to refrain from scapegoating “China” as the cause of the problem. Much of the capital sunk into Vancouver’s real estate market is generated by domestic networks, and by no means is China the only source of foreign surplus capital. Surplus from the Canadian resource extraction sector, for example, is a large source of housing speculation and investment. Given Vancouver’s long tradition of anti-Asian racism, we must be especially vigilant that old racists not use “foreign investment” as a new excuse for old racism.

    The NPA is attempting to make electoral gains by transmuting the affordability crisis into an ethnic one. Such attempts must be resisted forcefully, and progressive voices should focus on concrete measures that empower low- and middle-income residents of all backgrounds against developers and speculators. The best way to address the affordability crisis is to take measures that limit speculation regardless of the source of the capital – domestic or foreign.

    As Martin Luther King Jr. never tired of saying, we should “unite under the slogan of resistance to injustice.” Vancouver’s affordability crisis hurts low- and middle-income people and people of colour especially hard. Further, recall that surplus capital extracted from China is made possible by the conditions of oppressed labour sustained by Canadian-based capital networks. All oppressed groups are natural allies, and the networks between us are potential lines of solidarity and strength.