Average housing prices would have to drop by $413,000 or average salaries would have to more than double for Victoria to become affordable. (Black Press File).

Average housing prices would have to drop by $413,000 for Victoria to become affordable

Alternatively, salaries need to increase to $134,000 per year, more than double current levels

A new report finds average home prices in Victoria would need to fall by $413,000 to make housing affordable for a typical young person. Alternatively, typical full-time earnings would need to increase to $134,000 per year, more than double current levels.

These figures appear in a report Straddling the Gap: A Troubling Portrait of Home prices, Earnings and Affordability for Younger Canadians, which also includes a host of policy recommendations that target among other areas current tax regimes and the real estate industry itself.

Paul Kershaw of the UBC School of Population and Public Health and founder of Generation Squeeze, a organization advocating for housing affordability, and Sutton Eaves, co-executive director for Generation Squeeze, prepared the report.

“It shows that Canadians between the ages of 25 and 34 continue to straddle a massive gap between housing prices that remain at near-historic levels in key parts of the country, and earnings for this age group that have been relatively flat, if not down, for several decades,” it reads.

While the authors acknowledge the recent softening of the Canadian housing market, they remain pessimistic.

RELATED: Vancouver Island residents say municipalities are not moving fast enough on affordable housing

“Despite recent nominal declines in housing prices compared to previous years, the gap between the cost of owning a home and the ability of younger Canadians to afford it is still dramatic,” it reads. “Data in this report show that average home prices would need to drop by nearly 50 [per cent] for a typical person aged 25-34 to afford an 80 [per cent] mortgage on average-priced homes. Alternatively, earnings would need to double for this generation to afford the same home.”

Area residents can take some comfort in the fact that Victoria’s gap does not appear as severe as elsewhere in British Columbia.

“Average home prices would need to fall $452,000 to achieve affordability by 2030 – about two-thirds of the current value,” it reads. “[Or] typical full-time earnings would need to increase to $136,200 [per year] – nearly triple current levels.”

In Metro Vancouver, average home prices would need to fall about $795,000, about three-quarters of the current value. Alternatively, full-time earnings would need to increase by $200,400, quadruple current levels.

Kelowna residents, meanwhile, find themselves in a relative affordable place. Average home prices would need to fall $239,000, about half of the current value, it reads. Alternatively, typical full-time earnings would need to increase to $100,000 per cent year, nearly double current levels.

The report also includes several policy recommendations, with some more specific than others.

It recommends “governments at all levels” reduce non-housing costs. “These include expenses related to child care and parental leave, student debt and tuition, transit costs and more,” it reads.

Another recommendation calls for higher taxes to “capture wealth windfalls” as the “dramatic rise” in home prices in some regions has created a population of “housing lottery winners” not captured by the tax system.

“For example, annual revenue from municipal property taxation is down $4.4 billion (measured as a share of gross domestic product) by comparison with 1976, despite the $2.6 trillion in additional net wealth accumulated in principal residences over that time period,” it reads. In short, property taxes might not be enough, or not sufficiently granular to capture these windfalls.

“Similarly, federal estimates show that that non-taxation of capital gains from principal residences will cost the federal coffer around $6 billion in 2019, with corresponding losses to provincial coffers as well,” it reads. “These tax shelters have encouraged the commodification of housing in Canada.”

The authors also call for fundamental changes to the overall economic mix of Canada. They note the real estate and ancillary sectors account for 13 per cent of total GDP, yet employ only two per cent of Canadians.

“No other industrial sector has such a big gap between its share of GDP and share of employment,” it reads. “This means Canadians have been growing our economy by increasing the major cost of living, without generating jobs in that industrial sector at a rate that ensures local earnings keep pace, particularly in urban centres.”


Like us on Facebook and follow us on Twitter

wolfgang.depner@saanichnews.com

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The coroner on scene of a workplace fatality in Oak Bay on Oct. 20, 2020. (Nina Grossman/News Staff)
UPDATED: Dangerous branches delay removal of body in Oak Bay workplace death

Traffic restricted on McNeill Avenue near Byng Road

(Black Press Media file photo)
Be prepared: Know what to do in the event of a Greater Victoria tsunami warning

Localized alert systems can provide potentially life-saving information

A mature Garry oak fell onto Richmond Road on Oct. 13 near Camosun College Lansdowne campus. (Travis Paterson/News Staff)
Garry oak crashes down onto Richmond Road

Saanich responded to 59 tree-related calls

The Kildonan mansion at 931 Foul Bay Rd. is part of the Oak Bay heritage registry. (Black Press Media File Photo)
Oak Bay declines Kildonan House permissive tax exemption

Council briefs include new transformer for Oak Bay Rec., strata policy

The Better Business Bureau is warning people of scammers posing as Amazon customer support. (AP File Photo/Rich Pedroncelli)
Watch out for Amazon imposters, says scam expert

Better Business Bureau is warning of a rise in Amazon scammers as people online shop more

Working smoothly together on May 11, 2020, health minister Adrian Dix, B.C. Liberal health critic Norm Letnick, provincial health officer Dr. Bonnie Henry and sign language interpreter Nigel Howard. (B.C. government video)
COVID-19 co-operation a casualty of B.C.’s pandemic election

NDP’s Horgan weaponizes senior care, B.C. Liberal Wilkinson calls for ‘wartime economy’

Advance polls are open from Oct. 15 to 21 with election day on Oct. 24. (Black Press Media file photo)
Bernard Trest and his son Max, 10, are concerned about B.C.’s plan for students in the classroom. He was one of two fathers who filed a court application in August to prevent schools from reopening if stricter COVID-19 protections weren’t in place. That application was dismissed last week. (Contributed photo)
B.C. dad pledges to appeal quashed call for mandatory masks, distancing in schools

Bernard Trest and Gary Shuster challenged health, education ministries’ return-to-school plan

RCMP crest. (Black Press Media files)
RCMP cleared in fatal shooting of armed Lytton man in distress, police watchdog finds

IIO spoke to seven civillian witnesses and 11 police officers in coming to its decision

A 34-year-old man was treated for a gunshot wound in Williams Lake Monday, Oct 19, 2020. (Angie Mindus photo - Williams Lake Tribune)
Williams Lake man treated for gunshot wound after accidental shooting: RCMP

Police are reminding residents to ensure firearms are not loaded when handling them

A injection kit is seen inside the newly opened Fraser Health supervised consumption site is pictured in Surrey, B.C., Tuesday, June 6, 2017. THE CANADIAN PRESS/Jonathan Hayward
B.C. records 127 fatal overdoses in September, roughly 4 each day

Vancouver, Surrey and Victoria continued to see the highest numbers of overdoses

Investigators work at the Sagmoen farm in Silver Creek. - Image credit: Observer file photo.
Sex workers allegedly called to farm of Okanagan man convicted of assault, RCMP investigating

Curtis Sagmoen, convicted in relation to assault of sex trade workers, is prohibited from soliciting escorts

(Black Press Media files)
Early voters more likely to favour NDP, but overall B.C. election is tightening: poll

According to Elections BC, 383,477 people cast a ballot during advanced voting days

(Pixabay)
Wave of racist emails ‘unleashed’ on B.C. researchers investigating racism in health care

The team has received close to 600 calls and emails since the investigation started in July

Most Read