A recent report on International Housing Affordability by Demographia indicates that the City of Kelowna has the distinction as being the least affordable city to purchase a house in Canada, and the 13th least affordable in the world. This is just behind Sydney, Australia and the Gold Coast (also in Australia) which share the 11th place.

The international standard for affordable housing, is that the purchase price should not exceed more than three times the gross annual household income. Kelowna’s is 8.5. I’m not sure of all of the reasons why Kelowna is so high on the list, but certainly for many of the other cities, “Smart Growth” principles hold at least part of the blame

DEMOGRAPHIA: Demographics Development Impacts Market Research & Urban Policy

“the affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land.”

Land use policy has, in many cities around the world, screwed with the great (insert your country’s name here) dream of owning your own home. So called “Smart Growth” it seems, is responsible for these price increases. Denser housing is not always cheaper, for example concrete apartment construction can be as much as twice the cost of a stand alone house on a square foot basis.

Are the Developers to Blame?

Many people blame the developers for the high prices of the land, saying that they are making a killing off the sales. However, as this letter states, the reality could be quite different…(read more)

Scoop: Housing Afforability: Open Letter to Minister

The reality is that developers and builders are simply “manufacturers” of property – endeavouring as best they can within the regulatory restraints and commercial realities, to provide their customers with the highest standard “products” possible (if they don’t – their competitors will). The developers’ role is to take overall responsibility for the commercial and regulatory risks involved, absorb the unforseen contingencies and manage the extensive organisational requirements of the project, with the builder employed for the physical construction works.
In this work – the developer works with the regulatory authorities, architects, engineers, builders, surveyors, valuers, quantity surveyors, financiers, real estate agents, land owners, tenants, end purchasers, adjoining property owners and many others. It is the developer’s responsibility to ensure that the project is “financially viable” and if he fails in this regard, his / her reputation is seriously impaired.
Contrary to popular mythology (prevalent I might add within the academic circles you came from) the major asset a developer has is “reputation”. This asset is not acquired in five minutes – but takes years of consistently sound performance to establish. At its core — “reputation” is “trust”.

This is one take on the development process, certainly one that shines positively on developers, but is it the truth when many developments don’t produce great results simply because all of those engineers, architects, financiers, and builders are flat out keeping up with the crazy demand for their product?

Around here, the cost of building a new house is insane, and if you looked at one new construction as a function of affordability, the values would be off the chart. The interior of BC is still in a growth mode, with investment and relocation to the area bringing high demands, and well, who can blame them, we moved to the Kootenays, it’s a great place to live!

The Reality of Housing Price Pressure

The reality is that there will always be pressure to continue developing at the fringes of the urban areas, and while that may appear to relieve price pressures to some degree, what people are “saving” on their housing, they will pay for in gas and time spent commuting in traffic. Also of concern, (but obviously not to the authors of this report), is the loss of the agricultural land that is so essential to the long term sustainability of any city. Who wants to live somewhere where they have to drive for an hour and a half to work and has no local food production capacity?

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Published by Mike Thomas

Mike Thomas P.Eng. ENV SP, is the author of UrbanWorkbench.com and Director of Engineering at the City of Revelstoke in the Interior of British Columbia, Canada.

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