Countless articles and experts believe that higher supply of housing will alleviate the crunch in housing affordability that we are facing in Vancouver and other major cities. Yet, many skeptics say that higher supply will not help with affordability and they call for stronger policy response.
Supply to improve housing affordability
A recently published article in the journal Housing Policy Debate, the authors reviewed almost 100 publications and found that “from both theory and empirical evidence, adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families.”
They did note that increased supply alone will not be sufficient to improve affordability as a whole. Shelter for people that have been priced out will not be addressed. Thus, there is a need for government policies that “ensure that supply is added at prices affordable to a range of incomes.”
Land-use Regulations and Nimbyism
Even with so much data backing up the supply claim, supply skeptics have been successful in applying restrictions to land-usage as a means of alleviating housing affordability. In Toronto, housing supply has been restricted due to land-use regulations and Nimbyism (Not in my back yard mentality). Residents of single-family home neighbourhoods have opposed the densification of their land adding to the crunch in housing supply and increasing unaffordability.
The general challenge is not to supply more houses, but to ensure that new housing is built for every level of income. And that is where government policies can be effective. Both the government and the private sector need to work together to alleviate the housing affordability issues across all levels of income.
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