Latest academic analysis from leading experts supports Abana’s consistent view on affordability issues in Vancouver. According to Professors Somerville and Davidoff of the University of British Columbia, the affordability crisis is a function of both high demand and inelastic supply, the latter is in turn primarily a result of geographical and regulatory supply constraints. While there is not much we can do about our geography, the regulatory constraints are man-made and can be addressed via intelligent policymaking. “A long and arduous permitting process slows the supply response to increases in demand.”
The City of Vancouver has recently announced a new strategy to streamline their process and allow for higher density developments in certain neighbourhoods. While a step in the right direction, these policies don’t go far enough in addressing the unaffordability crisis.
The ambiguous, arbitrary and downright discretionary (often subjective) re-zoning policies across the Metro Vancouver Municipalities, coupled with high land prices places significant risk on developers and their investors when it comes to development projects that require re-zoning. This risk must be offset by higher return expectations that eventually is passed on to end-users in form of higher prices. Furthermore, lengthy approval process adds to carrying costs, especially in a rising interest rate environment, further contributing to the increased cost of supply.
A targeted, focused and consistent policy must be put in place across the Metro municipalities to encourage simplification and standardization of rezoning processes to help alleviate the supply constraints and at least partially pave the way to reduced price pressures on the City’s housing stock.View Article