Alberta's housing strategy protects affordability
Government policy plays big role, writes Brad Mitchell.
Alberta is home to two of Canada's five most populous cities, which rank consistently as having the most affordable housing of the five by large margins, especially when compared to Toronto and Vancouver.
Albertans spend an average of less than 30 per cent of their median income on non-condo housing, even in our two largest centres.
In fact, Alberta's more affordable housing is one of the factors that drives migration to Alberta.
This is not to say that Alberta has no affordable housing concerns. Certainly, there is work to be done on housing for low-income and marginalized populations. But the average Alberta family has access to affordable housing options.
Although market forces such as the current lack of supply in the resale market drive market prices, government policy plays a significant role in housing affordability. The current UCP and previous NDP and PC administrations have had the wisdom to avoid the pitfalls of implementing poorly thought out, reactionary housing policies that other provincial governments have embarked upon.
Smart regulation in Alberta is not by accident. Premier Jason Kenney's red-tape reduction policies, coupled with his conscientious decisions not to intervene in the free market will lead to fewer costs and more options for consumers in the long term.
Alberta's low tax regime is an important part of the affordability equation. Low taxes mean higher disposable income, relative to other provinces.
The Alberta government has wisely avoided the land transfer taxes imposed in other jurisdictions and has not allowed municipalities to implement land transfer taxes of their own. A 2019 study released by the University of Calgary's School of Public Policy found that even a one per cent land transfer tax would be the equivalent of six to seven per cent of the
Alberta's low tax regime is an important part of the affordability equation.
median household income in Edmonton or Calgary. Land transfer taxes discourage housing transactions and negatively affect the wealth of Albertans when they need to move.
In B.C., land transfer taxes contribute approximately $3 billion each year to general revenue. In many cases, sellers try to increase the sale price to offset their loss which further contributes to driving up the cost of housing.
When other provincial governments look for a bogeyman to blame for higher housing prices, they seem to have a blind spot as to how their own policies affect the market. Imagine if citizens in B.C. had $3 billion more per year to spend on living and they weren't forced to pay the government a fee for the stress of moving.
An end to blind bidding, proposed in the federal Ndp-liberal agreement, is another policy that this government is rightly wary of. Blind bidding is the current process, in which a seller sees all offers for their property, but buyers do not have access to see offers made by other parties. The policy is based on the fundamental belief that citizens should be allowed to sell their property and belongings in the manner they see fit. Sellers in Alberta have the option of using an auction format or traditional methods. This is the way it should be. Banning blind bidding would limit property owners' rights. Studies have shown that banning blind bidding does not make housing more affordable and may increase the average price of housing through open bidding wars.
Fortunately, the Alberta government, under its current leadership, has shown no signs of implementing this misguided federal proposal.
So, as we look forward to Alberta's recovery, it's my opinion that we're in good hands. We sometimes need to look beyond our provincial borders to see how fortunate we are in Alberta. It's eye-opening to look just next door and see that the high cost of living isn't just out of happenstance. Markets are sensitive to the policies of the government, for better or worse. In Alberta, consumers continue to benefit from the government's lack of meddling in the housing market.