The B.C. government plans to tax foreigners who buy residential property in the Vancouver area – an announcement that follows months of pressure to address foreign speculation that many have blamed for the region’s superheated housing market. Finance Minister, Mike de Jong, said the 15 per cent tax, which takes effect Aug. 2, will apply to the sale of all residential properties within Metro Vancouver, excluding treaty lands in the Tsawwassen First Nation. The tax will apply to buyers who are not Canadian citizens or permanent residents, as well as corporations that are either not registered in Canada or controlled by foreigners.
Mayor, John Tory, says he hasn’t closed the door on taxing foreign buyers in Toronto’s red-hot real estate market. But the mayor says he wants to wait and see what a federal group examining the situation in Toronto and Vancouver comes up with before committing to a strategy, which may or may not work. “Nothing has come back to me by way of recommendations as to what could be done by the province or by the city to address housing prices in Toronto,” he said Thursday. “Housing prices in Toronto, as they continue to escalate are a real concern to me not only because sometimes, if it’s representative of a bubble, bubbles burst.”
Canada’s federal housing agency has raised new alarms about Canada’s housing market, warning that euphoria over real estate is spreading beyond detached homes in Toronto and Vancouver to townhouses and condos, and to other cities.
Canada Mortgage and Housing Corp. said in its quarterly market assessment released on Wednesday that it sees what it calls “moderate evidence of problematic conditions” in the housing market after months of soaring demand have pushed national home prices up 14 per cent compared with a year earlier, faster than what economic drivers such as employment and income growth should support. While CMHC said most of the problems in the housing market remain concentrated in Toronto and Vancouver, it also raised red flags about Hamilton, a city near Toronto, and the national market.
Trevor Wilkie faces every day with the dread that he’s about to lose his family home in Surrey, B.C. The townhouse the single father rents with his two children and dog is for sale. The family faces the prospect of being priced out, as B.C. Premier, Christy Clark, prepares to head back to the legislature to grapple with new real estate rules. Wilkie fears he will have to pay $600 or more each month just to find a comparable place to rent, when his current home sells. That’s a rent hike he says he can’t afford.
British Columbia joins a growing list of regions around the world that are restricting foreign investment and speculation in their housing markets. Here are measures taken in six other countries to cool house prices.
So far, the discussion on housing affordability has primarily focused on demand-side issues. Beyond foreign homebuyers, low interest rates and increased demand for housing in Canada’s most desirable neighbourhoods are often pointed to as factors driving up prices. While all that may indeed be true – many people are happy to pay for the natural beauty of Vancouver, or to live in a global city like Toronto – these discussions ignore the fact that when a good is in high demand, it generally spurs greater supply. In the case of housing, however, there can be geographical constraints on building (notably in Vancouver) that hold back supply and contribute to higher prices. But even Vancouver has the capacity to add a large amount of new housing units, capacity that’s undermined by local and provincial housing regulations and opposition to more dense development.
Canada’s Federal Court of Appeal has granted the country’s largest real estate board temporary relief from an impending deadline to make home-sales data more widely available online. In a decision published on the court’s website Thursday, Appeal Justice, Mary Gleason, ruled that the Toronto Real Estate Board would not be required to meet an Aug. 3 deadline issued by Canada’s Competition Tribunal to make data such as a home’s selling price available to the public over the Internet.
In April, the Tribunal ruled that the real estate board’s restrictions on how its members share electronic home-sales data from the Multiple Listings Service was stifling competition and innovation in the Greater Toronto Area’s resale housing market. Under TREB’s existing rules, realtors were free to share details about the housing market with their individual clients, but were not allowed to publish such data in bulk on publicly accessible websites.
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Gavin is a media relations consultant and news junkie based out of Collingwood, Ontario.