Taking action to reduce housing prices in Vancouver could sap the equity people have built up in real estate, British Columbia Finance Minister Mike de Jong warned last year.
The hit from anything the provincial government might do to drop real estate prices in B.C. would be particularly painful for investors like de Jong, who has a personal ownership stake in seven investment properties in Abbotsford, an hour’s drive from Vancouver.
“You’ve got to be careful about intervening, about having the state intervene to try and regulate pricing, or depress pricing,” de Jong said last May as the #Don’tHave1Million campaign drew attention to the negative effects of high house prices in the region.
“Those who are expressing a concern, I think if you really assess what they are seeking, it is a reduction in the value of homes in Vancouver and that will have consequences for a lot of families,” de Jong said.
“If property values in Vancouver were to reduce by, let us say five per cent, that could easily translate into a reduction in equity for families that own homes in Vancouver of 60, 70 or $80,000,” he said.
“All I’m saying is you’ve got to be careful about how you use the tools and levers of taxation, and you have to be clear on what your objective is.” …
… de Jong owned or part-owned seven investment properties in Abbotsford, plus the home he lives in on the family farm where he grew up. It shows he received rental income from all seven of the investment properties.
– from ‘As Housing Prices Soar, Finance Minister Is Well Invested’, The Tyee, Jan 2016
Did you hear any objections from this individual regarding intervention when the state intervened by mispricing risk with preposterously low interest rates and government sponsored mortgages? No, you didn’t. Hypocrisy.
Intervention will not be necessary for the market to (eventually!) implode.
But, if intervention does occur, many will point to it as the cause.