Closing the door on potential buyers
Weaver’s anti-foreign ownership proposal won’t make Vancouver more affordable
GRETA KOOY // CAMPUS LIFE EDITOR
Photo c/o Cindy Tang
New Zealand applied a ban on foreign real estate ownership on Jan. 1 in an effort to reclaim its housing market. The ban came as a result of an influx in offshore interest and purchasing of real estate, to the point that The Economist named it the country with the most unaffordable housing prices in the world last year. In 2016, 1.16 million acres were bought by foreign buyers. The ban prevents anyone who isn’t a New Zealander, an Australian or a permanent resident to purchase property in the country. In an attempt to follow suit, BC Green Party leader Andrew Weaver has proposed that the province do the same, targeting more specifically overseas speculation.
The increasing cost of living in Vancouver and lack of affordable housing is overwhelming, and a problem that has been evident for some time. Discussed by all parties during the last provincial election, the issue of affordable housing still needs attention. A ban on foreign real estate purchasing and investment, however, is not a solution to the housing nightmare in the province. Weaver’s promotion of anti-foreign investment in the province is not a new idea. And although he and others that support the idea of banning foreign property ownership may have only the best intentions, these attempts to confront inflating housing costs are futile.
In the summer of 2016, the Liberal government carried out a 15 per cent surtax on foreign buyers in Metro Vancouver. This was former premier, Christy Clark’s answer to the housing crisis. When the tax was first implemented, housing prices did cool down temporarily, but it didn’t last long. By early 2017, housing prices were practically back to normal, and it still hasn’t been shown that Clark’s foreign homebuyer tax has helped at all.
Around the same time that Clark introduced the surtax, Weaver put forward a private member’s bill banning foreigners from buying farmland greater than five acres in BC, saying that the Liberal’s levy didn’t apply to all investment properties. Foreign investors would simply look beyond traditional income properties and take advantage of acreage on farmland. Weaver’s 2016 bill failed, and the same is likely to happen to his more recent proposal.
Drawing closer to the government’s February budget release, BC Finance Minister Carole James dismissed Weaver’s proposed ban in an email to CBC News, saying that banning foreign investment will not be used to tackle the housing crunch. Like James, BC Premier John Horgan disagrees with Weaver’s bid. “BC’s the gateway to Canada and I don’t believe we should we curbing people from coming here”, Horgan said to CBC News. “I’m a child of an immigrant and virtually everyone I see here is a child of an immigrant.”
Fearing that a ban on foreign real estate ownership would send the wrong message, Horgan also stated that the February budget will not include anything about a ban on foreign buyers. It would, however, include strategies such as building more rental units and family-sized homes.
David Parker, New Zealand’s Minister for Trade and Export Growth who introduced the bill in December, told Stephen Quinn from CBC’s Early Edition, “The underlying point for us is that we think the New Zealand market for homes should be for the people who live in them.” Weaver echoed this sentiment to Mike Smyth of The Province, “The problem is not the people who are coming here, the problem is the people who are not coming here. We’re not talking about immigrants or refugees. We’re talking about people sitting in office towers around the world who dump capital here as a safe haven to park their money.”
In September 2017, Statistics Canada reported that non-residents owned 5.1 per cent of the total value of homes in Metro Vancouver, and 7.6 per cent in the greater Vancouver area. However, the Canada Mortgage and Housing Corporation reported only 4.8 per cent of Vancouver homes were owned by non-residents. But numbers don’t reflect the reality of the situation, as many owners hide behind the guise of trusts and shell companies as a way around hurdles like Clark’s foreign buyer tax.
Only two solutions have been publicly debated thus far: more surtaxes on foreign buyers, and the outright ban on foreign property purchases. Neither have been shown to be effective. Foreign-acquired property isn’t reflecting local income, and loopholes are allowing offshore money to inflate housing costs. What needs to be discussed is a middle ground solution that addresses the unaffordability of housing in the province without labeling BC as hostile to foreign buyers. A ban is the exact opposite of what to do.