Dear readers,
After Canada’s real estate market skyrocketed by 40% in the pandemic era, provincial governments rode to the populist rescue with anti-foreigner taxes and new bans. It’s dubious that these policies will have any impact.
After Canada’s real estate market skyrocketed by 40% in the pandemic era, provincial governments rode to the populist rescue with anti-foreigner taxes and new bans. It’s dubious that these policies will have any impact.
The Federal Government banned foreign buyers from buying real estate in Canada for two years starting on January 1st, 2023.
How many foreign buyers are out there?
The numbers for Vancouver show that only 10 of every 1000 buyers is a “foreign buyer.” Removing 10 buyers out of 1000 will not make a difference to affordability. It’s a drop in the bucket!
This ban is somewhat dishonest if it isn’t meant to address housing affordability directly.
Maybe this policy is meant to win the governing Liberals votes by currying favour with a majority of the public.
Opinion polls suggest a majority of Canadians support new taxes and further restrictions on non-Canadians who own real estate.
How many homeowners leave their homes empty?
The BC Government revealed that only 2900 condos had been declared vacant based on the date they collected where the tax is applied. 2900 new residences is a good start but fall far short of addressing availability when 103,000 newcomers moved to BC in 2021.
The penalties for leaving your home empty will hit the pocketbook hard which will dissuade foreign owners:
In Vancouver alone, the City Council increased the Empty Homes Tax (EHT) to a whopping 5% of the assessed value for 2023! And we haven’t even factored in BC’s (the province’s version of the tax).
This means owners of a $1 million dollar assessed home would have to pay a $50,000 penalty for leaving it vacant. But does that make homes more affordable for you and me?
Fines for foreign owners sound like a great policy, but it won’t address the core issues of the availability of hundreds of thousands of homes which are desperately needed with the influx of immigration. Ottawa’s target is to welcome 1.5 million new Canadians over the next three years.
Furthermore, we’ve seen prices come down with rising interest rates. The federal government has arrived late to the game and is going after foreign buyers, because it sounds great and wins support. It won’t make homes more affordable for you and me.