Vancouver is 13th least affordable city in world

An international study of housing affordability done by Demographia places Vancouver as 13th worst in the world for affordability. Homes in Vancouver, Abbotsford, Victoria and Kelowna are "severely unaffordable" and among the top most expensive housing markets among six countries surveyed.

The high housing prices are not because they're desirable places to live, but because urban planners and governments limit urban sprawl, according to the fourth annual report by a U.S. public policy firm called Demographia.

There's "one clear conclusion: The affordability of housing is overwhelmingly a function of just one thing, the extent to which government place artificial restrictions on the supply of residential land," Donald Brash, a former governor of the Reserve Bank of New Zealand, wrote in the 2008 report.

Philip Hochstein, president of the Independent Contractors and Businesses Association, says it's time to rethink B.C.'s Agricultural Land Reserve, which restricts development near urban areas such as at Garden City and Westminster Highway in Richmond.

"The pathway to affordable housing is abundantly clear: Remove urban growth boundaries."

In Metro Vancouver, that means the Agricultural Land Reserve. Developers say it's time to reopen the debate on whether the ALR still makes sense, decades after it was brought in.

The Demographia report ranked affordability in Canada, the U.S., the U.K., Ireland, Australia and New Zealand based on how expensive housing is in relation to incomes, with a rating of three the cutoff for affordability.

Canada overall was rated at 3.1, which means it takes three years of median household income to buy a house at the median price, the midpoint between the highest and lowest.

Vancouver's 8.4 rating means it would take 8.4 years of median income to buy a house at the median price.

That news comes on the heels of an RBC housing affordability forecast that found Vancouverites would need 70 per cent of their net income to buy a house.

The numbers are painfully real for Carl Larouche, 44, a Vancouver teacher who recently bought a one-bedroom apartment on Great Northern Way for $265,000 after discovering 400-square-foot bachelors were fetching $300,000 in the West End.

But Larouche, who is from Saguenay, Quebec, the second-cheapest place in Canada to live, where houses cost about $100,000, said, "I would never go back there. Those are the sacrifices you make to live in Vancouver. I would be happy in a tent here."

Even though Vancouver's rating is up from 7.7 last year, Vancouver moved down to 15th spot overall. And Victoria, with a rating of 7.3, inched up one spot to 22nd.

Kelowna was ranked for the first time this year and vaulted ahead of Vancouver into 13th spot worldwide, with a rating of 8.5. Abbotsford, at No. 59 worldwide, was also ranked for the first time. Both are less affordable than Toronto.

Report author Wendell Cox argued that scarcity drives up prices and limiting growth limits supply.

For instance, housing is affordable in the large, vibrant cities of Atlanta and Houston because city planners don't inhibit growth.

In Vancouver, Philip Hochstein of the Independent Contractors and Businesses Association said it's time to rethink the ALR, which makes up 20 per cent of Metro Vancouver's so-called Green Zone. It includes parks and public spaces and accounts for 70 per cent of Metro Vancouver.

"It's one of the things driving up the cost of housing," he said.

"Supply is being restricted by the land use policy."

The ALR has become a "sacred cow," he said. "Meanwhile, my kids can't afford to buy a house."

Hochstein said 60,000 hectares set aside for agricultural use isn't being used for agriculture. He said it may be unrealistic to anticipate that the Lower Mainland could be fed by food grown on that land, a goal when ALR was born.

"We shouldn't be afraid to have the debate over whether it makes sense anymore," he said.

But urban planner Bob Ransford said, "If we develop all of the Agricultural Land Reserve, what would we do then?"

He said Demographia is an advocate of urban sprawl.

The report doesn't factor in other costs, he said, the largest of which is commuting, and intangibles, such as quality of life.

He also said Vancouver is more restricted by geographical factors than public policy. "They've got it quite backwards. By containing growth, we can lower house prices."

So the debate is on. Should restrictive land use policy like the Agricultural Land Reserve in B.C. be abolished? Will better land use policy and urban planning help solve the housing affordability problem in Vancouver?