Provincial updates of property value assessments—which determine property tax levels—are generally a prosaic affair, but Monday’s release of British Columbia’s latest assessment has received a lot of attention. More than half a million assessment notices have been sent out, and property values have grown dramatically.

Property owners in Greater Vancouver are told to expect detached homes to be valued 15 to 25 per cent higher than in 2015; valuations for townhomes and condos have risen by 5 to 10 per cent. Many B.C. homeowners have benefitted greatly from appreciating prices, but some are anxious about the implications of rising values for their property tax bills and are calling for policymakers to address these concerns. This perspective ignores deeper issues in B.C.’s urban housing markets, which are driving these record valuations.

Where there is demand for housing, but the supply of new homes is constrained, prices tend to rise. Greater Vancouver is bounded to the north and east by mountains, to the west by the Pacific Ocean, and to the south by the Agricultural Land Reserve and the border with the United States. Beyond these constraints to Vancouver’s outward expansion, local land-use regulations inhibit the process of building new homes within city boundaries.

A recent survey of homebuilders and property developers in B.C.’s Lower Mainland measured the impact of regulation on new housing. For instance, it generally takes between 10 and 13 months to receive approval for a typical residential development; this timeline peaks at almost 18 months in West Vancouver. Regulatory compliance costs and fees range from under $20,000 per new home built in Maple Ridge and Burnaby to $40,000 in the District of North Vancouver. In addition to timelines and compliance costs, local council and community groups often affect homebuilding. These groups tend not to deter development in Burnaby and Coquitlam, but have a substantial impact on homebuilding in the City and District of North Vancouver.

Although municipal and provincial governments are being called upon to address the tax implications of rising property valuations, policymakers should also address the underlying issue of regulations that constrain the housing supply.