Mortgage rates behind increasing unaffordability: B.C. housing minister

B.C.'s housing minister is blaming rising mortgage rates for increasing unaffordability in the housing market, as a new survey suggests average home prices are actually coming down in both Victoria and Vancouver.

Ratehub.ca used data from the Canadian Real Estate Association and found that while the average home price has dropped by nearly $12,000 in Victoria and more than $78,000 in Vancouver between January 2022 and January 2023, the amount of income required to afford those homes has jumped by more than $20,000.

Ratehub.ca's co-CEO James Laird said much of that is due to interest rates, which have also driven up the amount buyers must have to qualify for a mortgage under the federal government's stress test. The test is meant to ensure homebuyers can pay their mortgages if rates rise.

Housing Minister Ravi Kahlon says the province is making headway on creating more housing, but demand from newcomers to the province and rising mortgage rates are to blame for decreasing affordability.

Roughly 100,000 people moved to B.C. in each of the last two years, a welcome influx for a province that needs more immigration to help fill job shortages, but a trend that also brings more demand for housing.

"I also met with the federal minister to say to them that we need to tie immigration to both housing affordability targets but also housing starts," Kahlon said.

He added Ottawa hasn't committed to more money for housing.

While housing sales have slowed, there are signs that more listings may be available, which could make prices drop.

The opposition Liberals say the province isn't making enough headway on a 2017 campaign promise to make homes affordable.

"They're correctly acknowledging we're way too slow, and government, we're not getting the permits out quick enough," Liberal leader Kevin Falcon said.

"So what's the NDP answer? Let's hire up to 200 more bureaucrats to tell the existing bureaucrats how they have to move permits through faster. That's not how you do it."

The Bank of Canada will announce whether rates are going up further on March 8.

B.C.'s NDP government promises to deliver an updated housing strategy this spring.