There’s 201 pages in the new economic modelling report commissioned by the B.C. government, but only one line you are going to hear New Democrats repeat again and again over the next 10 months before the election.
“The additional 44,000 to 54,000 net growth in dwellings over five years estimated by our model would result in six per cent to 12 per cent lower prices and rents than what they would have been without the provincial legislation,” reads the report.
That’s the conclusion of five experts hired by the BC NDP to study the impact of new housing legislation passed last week by Premier David Eby’s government.
Expect those figures, and the idea of a “stabilization” in prices, if not an outright drop, to get thrown in the face of anyone who questions the sweeping housing changes made recently by the New Democrats.
“It’s going to create stability in the housing market,” Housing Minister Ravi Kahlon said Thursday, shortly after the modelling was released. “What we’ve seen in Auckland [New Zealand] is prices stabilized, rents stabilized and rents went down.”
The report estimated B.C. will add between 216,000 and 293,000 completed new housing “units” over the next ten years due to legislation that allows multiplexes on single-family lots and condo towers at transit hubs starting July 1, 2024.
The Canadian Mortgage and Housing Corporation says B.C. needs at least 600,000 new units by 2030 to improve housing affordability.
Both sets of figures are in addition to assumptions B.C. keeps building a base level of housing at its current rate for the next decade.
But Ministry of Finance officials admitted during a budget update last week that new housing starts are expected to drop nine per cent in 2024 — the year all these new housing rules kick in and construction of new multiplexes and condos is supposed to take off.
“Their own budget is showing there will be a drop in housing starts over the next few years,” said BC United Leader Kevin Falcon.
“Who are you going to listen to, the people providing real advice to the Ministry of Finance … or a minister or premier 10 months from an election realizing over 80 per cent of the public thinks they’ve done a poor job on housing?”
Falcon, a former real estate developer, called the new academic modelling “absolute patent nonsense” that failed to reflect the reality of high interest rates, labour shortages and other pressures.
“You will not find anyone of any credibility in the housing sector that says you are going to see prices go down in housing,” said Falcon. “They are saying that to try and appeal to what I call low information voters. They say these things and some people believe them, sadly.”
The modelling contradicted arguments Kahlon repeatedly made in the legislature that the value of single-family lots would not jump due to new laws that allow owners to quadruple the density on their property.
B.C. will likely see at least a 7.5 per cent increase in the price of single-family lots immediately following the new laws coming into effect, according to the modelling.
Perhaps in the medium term, once supply ramps up, that price might dip back down.
“In built-out areas like Metro Vancouver, single-family detached houses will overall become more scarce as they get replaced by multiplexes,” reads the report. “This will exert upward pressure on prices of single-family properties and their land.”
The modelling also backs Green MLA Adam Olsen’s assertions that existing homeowners stand to get even wealthier with the changes, widening the gap between those who can’t afford to own.
“In the absence of value capture, we expect any windfall gains from rezoning to accrue primarily to incumbent property owners, which can exacerbate inequalities in wealth without the landowner providing a social benefit,” read the report.
“This is particularly the case if the biggest windfalls are in the areas with highest home prices.”
Olsen was justifiably ticked off Thursday after fighting Kahlon on this point for hours in the legislature during debate on the bill.
"The regulations and modelling show that the government had answers to my important questions during the debate with the minister,” Olsen said. “Instead of a thorough discussion on significant housing reform, the minister chose to delay, dismiss, deny, and mislead.
“Minister Kahlon and Premier Eby should be ashamed of themselves for allowing a factless debate on housing legislation by withholding details, blocking answers to informed and important questions. Now, with the bill passed, it's too late to have these discussions on the record.”
New Democrats don’t appear particularly fussed about whether they withheld key information, such as the modelling report, when the bill was debated in the house, only to dump it out publicly seven days later. Realistically, very few people are ever going to read this 201-page report.
The NDP only expects the public to take away two things from the new modelling: Government’s housing changes could help build a lot more housing, and maybe even keep prices from skyrocketing. Both claims will feature heavily in the NDP’s re-election messaging next year. By the time the public knows whether they are true or not, the election will be long, long over.
Rob Shaw has spent more than 15 years covering B.C. politics, now reporting for CHEK News and writing for Glacier Media. He is the co-author of the national bestselling book A Matter of Confidence, host of the weekly podcast Political Capital, and a regular guest on CBC Radio. [email protected]
