VANCOUVER (Reuters) - Vancouver unveiled further steps on Wednesday aimed at easing a housing affordability and availability crisis, two days after a report warned that the West Coast Canadian city was the world’s most at risk for a housing bubble.
Mayor Gregor Robertson said Vancouver plans to restrict short-term rentals, such as Airbnb, to primary homes - a move aimed at increasing the availability of long-term rentals for residents.
Vancouver has already announced plans to tax vacant houses by the year-end, increasing costs for foreign owners who have helped make it Canada’s most expensive property market.
“Housing is first and foremost about homes and not about operating businesses particularly at a time like this when affordability and rentals and housing is at a real crisis point,” Robertson told reporters.
He estimated that the move could add about 1,000 homes to the long-term rental market. The city is proposing a new license to allow short-term rentals in principal homes.
Swiss bank UBS said this week that Vancouver topped its real estate bubble index in 2016, ahead of London, Stockholm, Sydney, Munich and Hong Kong.
“House prices in Vancouver seem clearly out of step with economic fundamentals, and are in bubble risk territory,” UBS said in the Sept. 26 report.
Last month the province of British Columbia, which includes Vancouver, imposed a 15 percent property transfer tax on foreign real estate buyers, cooling some parts of the market.
The changes sparked an abrupt shift in sentiment among some buyers of higher-end homes, who believe they now have the ability to sit back and wait to see if prices will decline after years of frantic bidding.
“The downturn happened quickly, and the psychology of most buyers is they don’t like to buy when no one else is buying,” said Rob Zwick, a Vancouver real estate agent.
Zwick said he is working with two families looking for a home in the C$3 million ($2.27 million) to C$5 million range, and they are finally seeing inventories rise - and are patiently waiting to get more for their money than they could in June or July.
“Buyers are just tired of getting raked over the coals,” he said. “If there is a reason to hold off and stick it to the sellers who have been demanding all their terms be met to sell, they are taking advantage of that opportunity now.”
($1 = 1.3200 Canadian dollars)
Additional reporting by Andrea Hopkins in Ottawa; Editing by Marguerita Choy