Just how affordable is Metro Vancouver?

The high costs of development could be helping to drive up housing prices in the city of Vancouver, figures provided to The Vancouver Sun by the Urban Development Institute show.

Various city development fees, community amenity charges and sustainability requirements add tens of thousands of dollars to the cost of building a condominium unit in the city of Vancouver. Vancouver charges far more than Burnaby and Surrey, the figures show.

Sky-high land costs and slightly higher construction charges also add to the cost of development in Vancouver compared to other parts of Metro.

“The significant cost premiums of building new homes in Vancouver, compared to Surrey, leads to two observable results,” said Anne McMullin, president and CEO of the Urban Development Institute. “Either the increased costs will inevitably be passed on to homebuyers or the viability of building new market housing will be suppressed. Regardless, the end game is a more unaffordable and less socially sustainable city.”

She says the most obvious way to address affordability is to look at the costs and supply of housing.

“Costs affect supply — if it’s too expensive to build, you’re going to limit the supply. But we still have the demand. There’s always going to be a demand — there are buyers who can afford it.”

But Brian Jackson, the City of Vancouver’s general manager of planning, says market demand drives the price of housing much more than the costs of development.

“If we took $1,000 off the cost of the CACs or we took $1,000 off the cost of the DCLs,” Jackson said, referring to two types of city development fees, “is the developer going to take $1,000 off the cost of selling the house? I don’t think they would – they’re going to get the highest price that they could.”

Nonetheless, he acknowledges developers take a lot of risks when they build in Vancouver.

“I think it’s a tough game out there, especially when the market is becoming soft like it is now,” Jackson said.

It may be a risky game for developers, but the figures provided to The Vancouver Sun still show developers making a sizable profit: even with the higher development costs in Vancouver the expected profit is $80,694 per unit, in Burnaby $54,652 and in Surrey $34,668.

Source: Tracy Sherlock, Vancouver Sun

One Response to “Just how affordable is Metro Vancouver?”

  1. Francis Says:

    Wages would have to reflect the prices in Vancouver. To buy a home at those prices is pretty scary!
    In Halifax we don’t see sky high inflation like in Vancouver. No sign of a bubble either.

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