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episode # 115

Speculation is Good for the Vancouver Housing Market with Murtaza Haider

Everyone is certain that speculating on housing is bad for Vancouver but is that necessarily true? Ryerson Professor Murtaza Haider sits down with Matt & Adam to critically unpack the assumptions that dominate the public conversation around the housing market and points to the role of speculative activity in building the most celebrated cities in the world. BC sits at a critical juncture!

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Episode Summary


About Murtaza:

Murtaza teaches real estate management at Ryerson University. His focus is on housing and real estate markets, along with looking at the relationship between transportation accessibility and land development. Murtaza writes a weekly column for the Financial Post which gets picked up by other publications.

On his article, Speculation can be good for housing markets – just look at Paris and what late 19th century Paris tells us about early 21st century Vancouver:

Murtaza found an interesting book on speculation in Paris’ housing markets during 1875-1895. When demand for housing there was tremendous, the population was growing by the hundreds of thousands in a very short time period. To meet this growing demand there was a need to build more housing and, to do so, investors and speculators were required. A collaborative union of architects was formed, and they brought in engineers and investors to find the risk capital needed.

In Vancouver today, housing demand far exceeds what we can build. We have constraints that Paris didn’t face: less land due to the ocean, mountainous terrain, and the US border. There is an attempt to curtail prices with [taxing] foreign buyers and Canadians not living in BC. A better approach, looking at Paris, is to welcome housing investment and create avenues for more construction, so demand pressures are eased without taxation. Another article addresses supply of new housing in Tokyo – a much larger city at around 30 million, yet with domestic fertility rates much lower than Canada and elsewhere. Despite this, they’re still building at a higher rate to relieve housing price and rent pressure.

Vancouver should find ways to embrace more investment in new housing construction. The 2016 foreign buyers’ tax caused the market to jolt, but it took less than a year for prices to rise. Taxation may help for a few months, but if demand is there in the long term and you don’t have supply to meet it, the impacts will remain short-term through new taxation.

On how over 13,000 buildings were constructed in Paris from 1879-1885, along with Tokyo’s quick pace of building, and why Vancouver is doing things differently:

A main reason is the lack of land in Vancouver. However, another systematic reason is the way of our planning culture. Most urban planners working for government are trained not to see builders positively (this is reflected in course curricula), and so they oppose them. They must impose zoning and density regulations, so cultural change needs to happen. Most people live in homes made by builders. Housing research is almost all on the demand side, not the supply side. To [get more information on supply], you need to know builders, what motivates them, and the constraints they face. Once we can say they provide something society desires, we will have a different view and can add supply-side solutions. Murtaza has seen the typical commentary of planning departments go something like, “We are building sufficient supply; there is no need for more.” However, this is not true given the rising prices; there is denial that the real solution is in supply.

In addition, the view that we don’t want foreign people living here would not have given us cities like Paris, London, and New York and what we love about them. The world has shrunk—if we want to attract global talent, we need to be welcoming. There is a need for us to make housing affordable, and the way to this is to build more than we are currently building.

On if there is no useful distinction to be made between foreign and domestic speculation, as the past two provincial governments have done:

For new construction, a builder must have 70-80% of units pre-sold before getting bank financing. This means a 5-7 year lead time before the building is ready for occupancy, and who wants to wait that long before moving in? People’s circumstances and needs change during that time. To solve this issue, financing must be made through investors. You won’t be the same person in 5-7 years, so those investing in the units can’t be the same people as those occupying them—therefore, speculators[1] and investors are needed. The role for investors is there with the way housing financing is structured in Canada. If you don’t have sufficient local investors, you need to look abroad.

On policies that could be implemented to do a better job of keeping housing for local residents, without thinking “provincially” (i.e. limiting the world from coming to Vancouver):

Look at the financing of new housing construction carefully and if there is a need for government to help lenders lend to builders. When there is a clear unmet demand for housing, government should ease the restriction of capital flow to builders—underwriting from government would ease the reliance on investors.

Another idea is to find all ways to encourage and facilitate builders to build more on developable land. If inventory is down to three years or less, find ways to make more inventory and ease restrictions on building things like brownfield properties and nanny suites.

On why we are now seeing such an uptick in Toronto and Vancouver’s markets, and if we’re catching up as “future” cities:

Vancouver tops the list of the world’s most liveable cities, and Toronto is close. People around the world pay attention to this and know we have a great thing going. We have the room to grow and, for Toronto at least, the desire to grow. Forty to fifty years ago it was Montreal, but businesses left for Toronto because of the political situation. [Toronto] knows its time has come. Vancouver is very unique: maybe only five other places have its infrastructure, natural beauty, calmness, absence of crime, and high quality human capital, universities, and health care—everyone wants this.

On the biggest risk we face, now that the BC government has implemented the policies it has:

The biggest risk is the unintended consequences. Government has intervened with the best of intentions and does not make decisions lightly. However, if housing really slows down as intended it will negatively impact provincial and regional economic growth. Conversely, if housing prices stop rising, it will impact property taxes and municipal revenue. So far, the interventions have had modest impact on the greater Vancouver market. 2017 was more of a recovery year rather than a significant decline, and 2018 looks promising. The fear is of the unknown, unintended consequences. Forecasting is a dangerous business. One thing governments can do is be flexible and adaptive, and don’t cast a policy in stone. If a policy is doing something different than intended, intervene again to correct the unintended consequence.

To find out more about Murtaza:

Murtaza and his co-author, Stephen Moranis, write The Haider-Moranis Bulletin, which can be found in the Financial Post every Thursday and sometimes in the Vancouver Sun on Fridays. You can also find it at

[1] Speculating is very different from investing and most people don’t know why. It isn’t like investing in stocks.

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