Do governments really want housing prices to moderate? One sometimes wonders.

Wednesday our federal minister of housing abruptly cancelled a housing funding announcement for two Metro Vancouver municipalities. The reason: Metro Vancouver plans to substantially increase DCC’s on development.

DCC’s (Development Cost Charges) are the fees municipalities charge developers to develop (or re-develop) properties within their jurisdiction. They are, ostensibly, to cover the costs of upgrading the infrastructure needed for the development, such things as road improvements, larger or extended sewer and water lines, etc.

Such costs, of course, get added to the final price of the development and flow through to the eventual home buyer. It makes sense that additions to the infrastructure grid should be paid by those who benefit from them rather than taken from municipal coffers.

But, over the years, these charges have increasingly become a way to extract funds from developers to pay for needed municipal works that municipalities have fallen behind on. (For example, I was part of one development here in Abbotsford where, as part of our DCC’s, we were required to repair a road that had been partially taken out by a landslide.)

DCC’s have become a major factor in the cost of development. When they go up, the price of new housing goes up, and the entire market responds.

We all know that we have a housing (inflation) crisis in this country. Most of that is driven by a shortage of supply. And much of that is driven by the “red-tape” and extended delays (time is money) that developers go through in the process of getting approvals for new construction. There is increasing pressure from all sides to reduce that red tape.

Finally, “long after the horse has left the barn,” governments have discovered that they need to address this crisis. Admittedly, governments are always way behind the curve when it comes to addressing major concerns but–excuse my cynicism–it’s hard to believe that this belated response isn’t connected to a slide in their popularity.

So, we’ve had a plethora of new announcements and initiatives. It began two years ago when the electioneering Liberals promised billions of dollars for housing initiatives, including a rent 2 own program (the first few dollars of which were released last month.)

Then, they issued a two-year moratorium on foreign purchases of Canadian properties, to decrease the demand a little and so put downward pressure on prices.

Our premier got into the act last fall when he decreed that all strata properties would henceforth be rentable and that all age restrictions were now eliminated, except for the 55+ seniors’ restriction.

He then announced a plan to legalize secondary suites on all traditional single-family lots (subject to appropriate guidelines) and allow up to four units on such lots.

What has happened to the market? Housing prices have stabilized but not decreased much—and most of that is attributable to rising interest rates, not government initiatives.

In lockstep with those rising mortgage costs, rental rates have also increased (as one would expect: investors don’t provide rental properties with a plan to lose money every month; if their costs go up, they raise the rents.) Average rental rates now exceed $2100 per month in Canada ($3300 in Vancouver.) (source:

The feds jumped back into the game this summer, removing the GST from new construction of rental housing.

This week there were to be two new announcements, one federal, one provincial. The BC one was made: Ten municipalities are being ordered to supply 60,000 new housing units within five years. Each of the municipalities has its quota, with interim targets and regulations regarding the number of bedrooms, below market-rate rental units, etc., as well as required annual progress reports.

If they don’t meet the targets “the government has said they retain the option of appointing an adviser or issuing a directive that could usurp the traditional jurisdiction of municipalities to oversee land use within their boundaries” (from the CBC press release).

The federal government announcement was cancelled because of the competing objectives of the Metro Vancouver plan, which would see apartment costs rise by an estimated $11,00-$14,000, single-family homes much more.

The squeeze is on for such municipalities as Vancouver, and for my own city, Abbotsford, which is notoriously one of the toughest for getting development and construction approvals and has one of the biggest targets on its back in the latest provincial announcement.

Will all this help moderate or reduce housing costs and rental rates?

Let’s put them into perspective: the major cause is still the high interest rates. These policies, collectively, should rebalance supply and demand somewhat and so put some downward pressure on prices, and so, also, on interest rates.

Even with the additional pressure, though, it will take time for all these initiatives, collectively, to flow through the system, with or without watchdogs. They will not lower your rent this fall.

Over the next five years, they may do a little to soften the prices.

At least, that’s how I see it . . .

Rons’ Top five

Most expensive rentals in Canada (from

  1. Brampton, ON
  2. Mississauga, ON
  3. Burnaby, BC
  4. Toronto, ON
  5. Vancouver, BC