A recent article in the Victoria News reports that Victoria rents are rising at the fastest rate in the country over the past year. Why are rents increasing at the rate they are in Victoria?
The problem is that we are losing lower-cost housing to new developments that are not “affordable.” The renters who were living in the original units are not able to qualify for a mortgage to buy the new units. However, investors can buy the new units and then rent them back to tenants who were displaced for an amount that will cover the investor’s mortgage – or they put them on Airbnb. The tenant has no choice but to pay the rent the investor wants and ends up paying the investor’s mortgage because they can’t qualify to get their own (system broken).
Because we have more and more people moving here with the financial resources, the additional housing that is built does not create an abundance of supply. The law of supply and demand only works when supply goes up, but demand does not. Plus, if prices started coming down, developers would stop building (they claim there is not enough profit now, even if the missing middle housing initiative (MMHI) is implemented).
These factors are all the reasons why the MMHI, as it is written now, will make things worse rather than better. There will be more incentive for developers to tear down existing affordable housing stock to build new expensive units, but there will be no protection for those being displaced. Additionally, regular “home” builders and residents will have to compete with for-profit developers for land.
These are facts. We all see it happening. The solution has to be more regulation not less.