A more accurate picture of Victoria’s housing market recently emerged from CMHC’s new Housing Market Assessment report.
It says Greater Victoria has shifted into overvaluation territory, however, they note the calculation includes carrying costs – “a key determinant for affordability.”
The report reveals the new stress test (MQR-mortgage qualifying rate) and rising interest rates are having a big impact on affordability.
CMHC adds “other demand fundamentals supported growth in house prices. The young adult population grew faster than the general population and real disposable income increased.”
We have said for some time that the most significant demand is from millennials getting traction in a strong economy and starting families. This was predicted more than 20 years ago in David Foot’s bestseller, Boom, Bust and Echo.
However, the BC govt created greenbelts to limit housing growth and undermined regional planning with their policy of municipal self-determination. This is why we lack housing affordability, sewage treatment and LRT.
The rare exception is Langford which stands out as the most efficient and far-sighted local govt, building more than 40% of new housing in a region of 13 municipalities, many of whom have challenging and costly development processes.
CMHC adds that supply and demand fundamentals like “employment and population growth, have not indicated overvaluation in Metro Victoria.”
Carrying costs are pushing our region into overvaluation territory, assisted by unnecessary govt regulations and fees adding more than a quarter million dollars to the cost of a new home according to the C.D. Howe Institute.
Boosting supply in more CRD municipalities would help reduce prices and carrying costs while addressing the issue of overvaluation.
Municipal elections are October 20, we can do better.