More British Columbians than ever are buying their piece of real- estate heaven in Lotusland — this, despite the fact B.C. has the most expensive housing in the country.

The major reason for the “happy” situation is, of course, historically low interest-rate levels coupled with a relaxation of purchasing rules that permit buyers to purchase a home with virtually no money down.

Given the robust market, you’d think the problem of affordability is gone for good.

Not so. In fact, it’s about to leap back into the faces of buyers and housing developers.

There’s a virtual certainty interest rates in Canada have bottomed out and will increase — most likely in this year’s fourth quarter.

Initially, rate increases are not expected to cool off searing real- estate markets. But they will eventually bite, and thousands of potential buyers could disappear from the market.

At that point the affordability problem will return with a vengeance.

This should concern Victoria because the government and B.C.’s economy are both major beneficiaries of the housing boom and can ill afford to see the residential-building industry suffer.

House prices are largely market driven, but are too often viewed as a simple case of supply and demand. As the construction industry and others involved in the sector constantly point out, provincial and municipal governments play a key role in housing affordability.

They set taxation policies and rules that land firmly on the bottom line for every homebuyer. Just to mention a few — there’s the Property Transfer Tax, the ceiling on homeowner grants as well as property assessment and development-cost charges.

Combined, they add many thousands of dollars on to the cost of a home and thus increase the burden of affordability.

The B.C. Real Estate Association is one of many groups imploring the government to help with housing affordability.

It says reducing the Property Transfer Tax would be a good starting point.

Abolishing the Property Transfer Tax on property sales under $200,000 and for first-time buyers would have a beneficial impact on affordability, it argues.

Eliminating the ceiling on the homeowner grant program would also help. It was recently boosted to $585,000 from $525,000 and covers 95 per cent of homeowners across B.C. So why not just get rid of it?

These are sensible suggestions and they shouldn’t be ignored.

But we fear that despite its pledge to support private enterprise, the current Liberals are just as tax -happy as previous B.C. governments.

Home-buyers wish it were otherwise.

© The Vancouver Province 2004