Thanks very much for the question. As you correctly identified, it's one of the major issues facing B.C. right now.
I should probably start by saying that I've lived in British Columbia for eight years, and you are looking at an eight-time loser in the British Columbia housing market. Each one of those eight years would have been a really good time to buy a house, and I haven't, so you should probably take what I have to say with a grain of salt.
As I said, it is a real risk to the economy and it's not just the direct impacts on home sales and construction. The run-up in housing prices has had a number of other really important effects. For example, house renovations now actually outpace new home construction in terms of contribution to B.C. That's at risk.
The wealth effects that are associated with a run-up in housing prices would also be at risk. The wealth effects occur when your house is, as is the case for many people I know in B.C., worth three times what you paid for it, and you feel a lot wealthier and you're likely to decide to go to Cactus Club rather than to Tim Hortons. Your house prices come down and that's going to unwind seriously. It's those kinds of effects that were behind that estimate I gave that more than one-third of recent economic growth is at risk.
Regarding the measures that have been taken to cool off the B.C. housing market, honestly, it's too early to say whether those have had an effect or not. The volume of house sales in B.C. was dropping before the recent tax on foreign property transfers was put in place. It may accelerate that trend. It will be difficult to say, and of course, the mayor of Vancouver has been talking up the idea of a vacant home tax that could have much the same effect. But I will say this as well, that the business community is starting to view the run-up in housing prices as a serious break, or a serious mitigating factor, in the overall investment climate in British Columbia. There are increasingly few places in the world from which Vancouver looks cheap—in places like Singapore, Hong Kong, and L.A., Vancouver housing still looks cheap—but that list is growing shorter.
WD has no direct role, obviously, in housing policy or in the housing sector, but the housing affordability problem is at the root of the impact on the investment climate. People in B.C. are now faced with devoting something like 88% of their median income to a home purchase, which is far in excess of even the next hottest housing market in Canada, which is Toronto.
I mention that because the housing affordability problem has both a numerator and a denominator. It's house prices, yes, but it's also income, and B.C. has lower median incomes than the rest of the country. The kinds of projects we are working on, things like the wind initiative, which is aimed at increasing jobs in high tech start-up firms that have technology commercialization potential, that sector pays well above median wages, as much as 40% to 60% above median wages. When a company we fund succeeds, we're contributing to the denominator of the housing price problem.