Given the current political situation in BC, it's almost a given that a new party, with very different economic goals and policies, will form government next spring.
To be clear, this blog post isn't political. I could care less if you self-identify as a far-left moonbat dipper, a right-wing whacko or a centrist liberal who simply tries to get out in front of the herd... this post has nothing to do with your personal political leanings. Or mine for that matter.
I'm trying to answer the question: should we expect the local housing market to react to a government change next spring?
History, perhaps, tells us we shouldn't:
The areas highlighted by the orange are the years the NDP was in power in B.C. The rest of the time we've been governed by so-called free-enterprise coalitions under Social Credit or Liberal names. Does this chart tell us anything? You could perhaps make an argument that prices are more likely to rise, and rise further, when the NDP isn't the government, but I'm willing to bet a savvy statistician could make a mathematical argument that this is a junk claim.
Between 1972 and 1975 prices rose, but we can't say with certainty exactly what the dollar amounts were because VREB only gives us hard numbers from 1978 on.
Between 1991 and 1994, prices rose from around $192K to $256K or 25%, a nice little jump should you have bought and sold the average SFH in those years.
Between 1994 and 2001, prices fell around an inflation adjusted 21% if you believe inflation was 3% for each of those years - in non-inflation adjusted terms prices were roughly flat.
Does the provincial government establish policies that can impact the inflation rate? Economically speaking, not so much. So we can't really say with any certainty that the provincial government of the day was responsible for the financial woes apparent in our mid-to-late 1990s housing market.
There's a bit of a myth around B.C.'s population during NDP governing times in the 1990s--I fit into the myth too as I left the province for the last 5 of the 10 years they were in government to find decent work--but the data doesn't support the myth:
Population growth rates
1986-1991 = 13.8%
1991-1996 = 13.5%
1996-2001 = 4.9%
2001-2006 = 5.4%
Sure, it's true that the growth rate of B.C.'s population declined sharply after 1996, which may partly explain the housing doldrums in those years, but the rate didn't jump sharply afterwards to coincide with the rapid rise in home prices between 2002-2007 (or the change in governing party).
B.C.'s property transfer tax came into effect in 1996--this is definitely a provincial economic policy with direct effect on the housing market--but it appears to have had little to no effect on the local SFH price.
To end this post, and hopefully spark some discussion and some other contributions to the history here, I'll point out that I've failed to answer my own question and failed to bring in a number of other housing market factors (supply & demand rates, etc). What do you think? Will a change in government cause home prices to rise or fall next spring?
