小蓝视频鈥檚 housing market is moderating and moving in the right direction, according to finance minister Carole James.
鈥淚t鈥檚 what we are looking for. We are continuing to monitor it.鈥�
The correction in the market is not over, she said Tuesday.
小蓝视频 committed in its 2018 budget to seeing 114,000 new affordable homes constructed within its 10-year housing plan, valued at $7 billion.
A generation of young people has been left to believe that it would never be able to afford a home or raise a family here, she said.
While 小蓝视频 is 鈥渟tarting to see moderation in the market,鈥� James said, 鈥淚 don鈥檛 think we are at a stage where we can say that housing is affordable.鈥�
The best thing the province could do to stabilize the housing market would be to work with local governments to find ways to encourage builders to continue building even during slow periods, said Cameron Muir, the 小蓝视频 Real Estate Association鈥檚 chief economist.
Muir said that James鈥� reference to moderation is an 鈥渋nteresting word鈥� given the dramatic drop in sales in 小蓝视频 that he calls a 鈥減retty significant downturn in consumer demand.鈥�
The number of real estate sales slid by 24.5 per cent in 小蓝视频 last year compared with 2017.
His recommendation for closer co-operation between the province and local governments is aimed at smoothing out historic oscillations in the real estate market to keep housing starts steady.
鈥淲e know when we have strong demand and very little supply, home prices accelerate.鈥�
Muir recommends finding ways to speed up the development process. In the Lower Mainland, for example, it takes about five years from conception to complete a condominium tower.
Rapidly rising prices reflect the inability of builders to supply the market in a timely way, Muir said. 鈥淲hen we have several years from conception to completion of a housing project, it is very difficult for builders to time markets because demand oscillates quite wildly.鈥�
The federal government brought in a stress test to ensure people would not lose their homes if loan costs went up. This move and rising interest rates have seen some potential homeowners losing up to 25 per cent of their purchasing power, Muir said.
鈥淎nd when you pull that much purchasing power away and make housing that unaffordable, it鈥檚 not a surprise that you see a big decline in a consumer demand.鈥�
Muir said that new home construction is expected to slow considerably. 鈥淭hat is exactly the wrong thing you need in order to keep housing affordable.鈥�
Jill Atkey, chief executive of the 小蓝视频 Non-Profit Housing Association, is pleased with the new budget.
鈥淲e were very much looking for the government to stay the course with the housing investments that they made last year and they have done exactly that.鈥�
