Conservative Leader Stephen Harper said on Wednesday that his government, if re-elected, would begin collecting data on foreign ownership of Canadian real estate – and would consider new taxes and regulations to ensure housing remained affordable.
Mr. Harper, who has made numerous campaign promises since the federal election got underway, made the remarks in Vancouver, where the average price of a detached house has soared to $2.23-million amid intense debate about an affordability crisis and the role that foreign capital and “non-resident” buyers play in the city’s housing market.
On Wednesday, The Globe and Mail reported that Macdonald Realty Ltd., a prominent British Columbia real-estate company, said 70 per cent of the properties priced at more than $3-million that it sold in 2014 went to buyers from mainland China – and that 21 per cent of the buyers of homes worth between $1-million and $3-million also went to such buyers.
In his remarks, Mr. Harper mentioned “real-estate speculation” and the large number of condos that have been bought up but kept empty as an investment, by foreign buyers – a phenomenon that, in Vancouver’s downtown Coal Harbour neighbourhood, was found in one study to account for nearly 25 per cent of all condo units.
“There are real concerns that foreign non-resident real-estate speculation is the reason some Canadian families find house prices beyond their budgets,” Mr. Harper said according to a prepared statement. “If such foreign non-resident buyers are artificially driving up the cost of real estate, and Canadian families are shut out of the market, that is a matter we should do something about.”
The role of foreign investment in Vancouver’s real-estate sector is a subject that remains hugely controversial for several reasons, at least in part because the city has historically been shaped by Asian immigration – particularly from Hong Kong.
Real-estate firms and homeowners have profited immensely as prices for detached houses and luxury properties have soared in recent years – boosted in part by tens of thousands of millionaires from China who arrived in the last decade on formal “immigrant investor” programs launched by the federal and provincial governments.
But many think this additional demand has forced aspiring local homeowners to bid up lesser-valued properties to the point where the strong, new demand from Chinese buyers has actually trickled down into property categories and neighbourhoods far outside where foreign investors tend to buy properties – such as Vancouver’s West Side and Shaughnessy neighbourhoods. Vancouver Mayor Gregor Robertson has asked B.C. Premier Christy Clark to intervene in the market and consider a speculation tax, but Ms. Clark said the province will not take any measures – partly because it doesn’t consider foreign ownership of property a problem, and partly because new regulations would lower the value of homeowners’ properties.
A backgrounder on the Conservative Party website said Mr. Harper would spend $500,000, starting in 2016-17, to collect data on “foreign buyer activity … particularly in Vancouver and Toronto,” and “take action” in co-ordination with the provinces to make sure real estate in Canada remains affordable. The Conservative website refers to other jurisdictions that have tracked and enacted regulations to counter the effects of strong foreign-capital inflows into real estate – such as Australia, which limits foreign investors to new housing units and bars them from purchasing existing housing stock. It also mentions “tax tools.”
Eveline Xia, a local activist who recently held a rally on housing affordability called “Give Us Data,” said she was shocked by the fact that a federal politician has raised the subject of foreign ownership in real estate, but hoped that the issue remained non-partisan.
“There are people who are coming up to me saying they will vote for anyone who takes this on,” Ms. Xia said. “And I just wish that the other parties will match it. Collecting data should not be a left, right or centre issue. It should be common sense.”
Dan Scarrow, who runs Macdonald Realty’s Shanghai office and courts Chinese buyers for Canadian real estate, said more data on the subject is definitely needed but he was unsure what Mr. Harper intends to actually do about it.
“I applaud any effort to collect more data on this issue, although I’m cautious about what the federal government can or will do about this,” Mr. Scarrow told The Globe. “After all, Canada is a big country, and a policy that may help one region may inadvertently hurt another.”