Unintended Effects of Government Policy

Unintended Effects of Government Policy

We are all concerned about rapidly increasing real estate prices and the myriad of difficulties they bring, the most salient of which is affordability, especially for the next generation of potential homeowners. Recently the provincial government has introduced demand side policies aimed at driving prices down and in this article BC Real Estate Association Cameron Muir addresses the hopefully unintended side effects. 

The desire of some well-meaning British Columbians for government to drive down the price of homes through demand-side policy may sound practical at first blush. However, when you consider the broad and deep economic toll that a negative shock to home prices would exact on both homeowners and renters, it quickly becomes apparent that such an approach is at best, a mug’s game. BCREA Economics analysis* shows that even a relatively modest negative price shock will produce significant consequences to the BC economy. read more