Finally a politician with the guts to call it like it really is regarding foreign ownership. (Video here.)
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The Vancouver real estate market has a reputation for sky-high prices and cutthroat competition, but a Port Coquitlam city councillor says it’s not just the big city where prices are out of control.
“It’s happening in the suburbs too,” says Coun. Brad West. …
He described an open house he visited recently for a “modest,” 2,400-square-foot home with a small backyard that was listed for $1.1 million. A price he said is unaffordable for most people who live in Port Coquitlam.
“The house will sell in under a week, it will go for over the list price, there will be multiple offers,” West said, summarizing a conversation he had with the real estate agent selling the home. “The overseas demand is making local demand irrelevant.”
It’s time for politicians to stop “hiding” from the issue of foreign ownership in Metro Vancouver, West said, arguing that the province needs to collect data on where buyers are from — something it has started doing — and consider implementing a tax on nonresident owners.
“It’s a complex issue, I understand that, but we need to start talking about it, and start looking at our options to address it, because the status quo is just not sustainable for most people in this province,” West said.
And the March continues on to New Westminster…..
“Although the successful purchaser already lives in New Westminster, Schlechtleitner said three offers appeared to have been from offshore or overseas’ purchasers, a trend she’s seen develop in New Westminster in the past year. She estimated 80 per cent of people attending her New West open houses are from mainland China.”
http://www.newwestrecord.ca/news/queen-s-park-home-sale-historic-in-new-west-1.2190025
We have disagreed on this. I’m not saying there isn’t some way to cool the housing market or that it shouldn’t be done. It is pretty damn silly. But a clumsy tax on foreign buyers will have zero impact. Prospective foreign buyers will just move through as many Canadian brokers as it takes to affirm the transaction. This goes for adding a fee or almost any other restriction or disincentive you place upon foreign purchases.
It’s tricky, especially if you DON’T want to be blatantly discriminatory. But Mr. West is right about one thing. It does need to be talked about. Despite the effects on non-millionaire home buyers, cities and the province are very much in favour of ridiculous housing prices and the taxes incurred on those transactions.
I saw a recent proposal where if the property owner does not pay 15k in annual taxes then property tax for the owner goes up significantly. This would be for properties over 500k for example.
You are forgetting the Millions that are being un-taxed and left on the table to fund a range of affordable housing options and other projects like Transit. I like the Australian model, tax and restrict foreigners and limit purchases to new construction which preserves heritage and spurs new building projects helping the economy.
What untaxed millions? How is taxation on the current, costly housing market leaving money on the table? If anything, artificially deflating the cost of housing is an outcome that will defund transit and social amenities.
It appears Mainland Chinese money is unstoppable so artificially deflating the cost won’t happen (Sydney was #2 behind Vancouver for biggest increase). Therefore if we are taking 15, 20, 30% of these sales we are building a big tax base to fund projects. These are the untaxed millions.
If the flow of investment money into real estate is truly unstoppable then a massive new tax won’t have much of an impact on demand or prices, but it would yield billions in new tax dollars that could be used to reduce other taxes and build new housing.
I would be careful to avoid trying to classify investors based on nationality, ethnicity or any other factor. Instead I would tax everyone and then give income tax credits for housing that’s actually being lived in.
Those living elsewhere and those who make all their money overseas would obviously get nothing back.
I would go further and require every tax payer to declare a principle residence, prove they live there at least 6 months/year and only allow a tax credit against that one property. Any place you plan to rent out, use seasonally or leave vacant would be subject to the full tax with no chance of getting any of it back.
That would increase the cost of rental housing. The offset would be the construction of thousands of new units and a tax credit for those who rent their principle residence.
Simple.
Nearly impossible to avoid.
Hammers foreign investors hardest.
Helps Canadians who are looking for a place to live, not a source of income.
I came across an article in the Sun dated July 2014 that studied the housing affordability issue in Toronto and Vancouver. They found both cities averaged very closely together with 87% of condos selling to locals, and 17% registered to numbered companies. The vacancy rates were quite low, and accounted for travelling owners. Another study pegged foreign ownership reporting in at about 5%. Last year Telus Garden sold around 430 units to its own employees.
What are the main differences? Condos vs detached homes. West side / waterfront vs everywhere else. Short supply vs high demand. And then there is the context of very cheap credit.
Ethnicity matters little. Anecdotal stories are not conclusive. Even the councillor put his foot in it by appearing to draw a conclusion that Asian investment alone is to be blamed for all housing affordability ills. By all means, do the research. But it’s foolish to write the conclusion until the analysis is complete.
While you’re standing around waiting for the stats the entire region is being bought up by Mainland Chinese. Newsflash: They’re panic buying to get their money out before China collapses and we are getting destroyed forever. If you’re waiting for the Liberals to tell you this, wait on.
The prices of detached housing rose by over 500% since 1998. Condos by far, far less. “Mainland Chinese” may account for a fraction of that increase, maybe even 20%. But 100%? THAT requires backing, not rhetoric.
Wait around for all the legislated prejudice you want, detached housing prices will not come down much, if at all. The demand extends to a much wider clientele than those from mainland China. The supply is inadequate. Credit is cheap. The rich from all over will still buy in desirable locations.