Housing prices are linked to a province’s economy and specifically employment.
BC has the lowest unemployment rate in Canada at 4.4%. We also have the highest average home price at $665,000.
The lowest home prices are in the Atlantic provinces averaging $162,000 in New Brunswick to $250,000 in Newfoundland.
Why are their prices so low? The region has some of the highest unemployment in Canada – in some cases double BC’s rate.
Young people have been leaving in droves to look for work. From 2011 to 2016, the east coast saw Canada’s biggest decline in population ages 15 to 64.
When the govt blames foreign buyers and speculators for BC’s high housing costs, they overlook the fact that a strong economy and employment are the main drivers of housing prices. A recent study by CMHC revealed BC and Nova Scotia have identical non-resident home ownership rates (3.7%), yet BC’s avg home price is $665,315 while Nova Scotia’s is $234,202.
Add a large generation of millennials seeking work in BC and supply becomes even more critical.
This is not a bad problem to have as long as supply is accommodated.
The BC govt promised in the Throne Speech to deliver “more efficient and effective project approvals” but no resources were allocated in the budget.
The budget did forecast a 25% decline in BC housing starts during the next 3 years and our concern is the lost skilled jobs accompanying such a decline.
As outlined in our recent Housing Forecast, there has been a 25% reduction in home sales mostly due to the mortgage stress test launched last year.
Governments at all levels would be wise to help curb housing costs, promote supply and learn from other parts of Canada.
As housing prices moderate, people still need jobs to buy homes, even affordable homes.