December 12, 2013 - 4:44pmUpdated: December 13, 2013 - 5:00pm
House for sale sign.
An American expert who has grown concerned with the high house prices facing people trying to buy into the market in Regina has said the city itself is partly to blame.
Wendell Cox, senior fellow with the Frontier Centre For Public Policy, has released a report on the affordability of housing in Regina. His report found that there's a fundamental issue with the cost of land in Regina.
“The problem is when you put houses on land that is the price of gold you can’t sell them at a price people can afford,” he explained. “The City needs to be monitoring the price of land. And if land prices are not where they were ten years ago, adjusted for inflation and so on, then they need to loosen up and allow more land to be developed,” said Cox.
Cox said part of the problem is the extent of regulation the city imposes on new development. He says it’s creating false scarcity.
“We always get concerned when OPEC decides they’re going to cut back on oil production and everybody rushes to the gas station, you know, to get gasoline while it’s still cheaper,” said Cox. “The point is: when there are supply constraints prices go up and that’s the big problem that I’m concerned about Regina in the long run.”
Mayor Michael Fougere disagreed.
“The whole notion of urban containment doesn’t really apply to Regina,” said Fougere. He said 70 per cent of housing developments are slated for new land. The other 30 per cent is infill development.
“We actually have a good balance between new growth and existing growth,” he insisted.
Ned Kosteniuk, vice-president of Regina land for Dundee Developments, backed up the mayor’s story. He feels City Hall has been responsive to the need to acquire more land.
“But it has taken us by a bit of a surprise. There was a need, a very imminent need, that we required these lands to be annexed.”
Kosteniuk is referring to the recent land deal between the City of Regina and the R.M. of Sherwood.
“If we don’t have another subdivision going we’re basically going to void the market of product and that’s only going to do one thing: it’s going to cause a situation we do not want to be in,” said Kosteniuk, who agreed with Cox's assessment that land prices are a problem.
“They’ve gone up significantly and that’s simply because there are willing buyers.”
The other part of the problem was how quickly growth began.
“In 2008, we started to say, ‘Wow. This isn’t just a spike’,” said Kosteniuk. He says it took a while to get caught up.
Fougere granted that some of the information in Cox’s report is helpful.
“But I don’t know if it’s really telling the entire story of Regina,” he wondered.
Fougere says he thinks much of Cox’s analysis would be more applicable to larger cities such as Vancouver.
According to the Canada Mortgage and Housing Corporation (CMHC), prices are expected to rise next year, but at a slower rate. CMHC pegs the growth of new home prices at 2.8 per cent. That’s down from 4.4 per cent in 2012. The corporation predicts increasing supply that will provoke moderate price growth.