Kris Wallace and Andy Ali of Vancouver say their search for a larger condo to give their family more room has been frustrating. Real estate and rental costs in the city are so high that their 26-year-old daughter is still living with them and they’re all feeling the squeeze.
But Wallace says that ban didn’t do much for her family.
“There’s all of these very luxurious buildings going in all around us that are outrageously priced,” said Wallace, after attending an open house at a promising $1.1-million condo. “The foreign buyers tax … I don’t think that’s making an iota of difference.”
Critics say the foreign buyers ban, which was aimed at making housing affordable for Canadians, had many exemptions and was more of a political manoeuvre. They say it’s clear housing remains out of reach for too many in Canada, and that the country should look to other places in the world to find strategies to foster home ownership.
Federal budget’s housing plan targets foreign and first-time homebuyers
Housing affordability is a key focus for the Liberals in their 2022 federal budget, with promises of a ban on some foreign buyers for two years and billions of dollars to help first-time home buyers get into the market.
Though Housing Minister Sean Fraser’s office declined an interview request, his spokesperson said the government had worked with cities across the country to help “over 250,000 new homes get built over the next decade.” Earlier this month, the government announced a deal with Vancouver — $115 million to fast track the building of 40,000 homes in coming years.
In an email, the Canadian Mortgage and Housing Corporation (CMHC) said 2023 data from the Canadian Housing Statistics Program is not yet available to determine the ban’s full effect.
The CMHC said Ottawa is “working to ensure every Canadian … has an affordable place to call home,” citing moves to forgive GST from newly constructed rental units, $20-billion in apartment financing and other initiatives.
In Vancouver late last month, Deputy Prime Minister Chrystia Freeland said the ban “is making a difference” by preserving housing where people can live. Earlier in November, Conservative Leader Pierre Poilievre said that rather than helping to make housing affordable, the government’s policies have instead “made the problem worse.”
The housing minister acknowledged the housing crunch earlier this month, but challenged Poilievre’s strategy. “He seems content to tap into the anxiety of Canadians without putting forward a plan that’s actually going to help them,” said Fraser.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act was meant to bar non-citizens, non-permanent residents and foreign controlled companies from buying Canadian property as an investment, but critics say there are so many exemptions that the ban doesn’t make much of a difference. (Ben Nelms/CBC)
Exemptions watered down ban
CMHC data reveals that only two per cent of real estate purchases in 2021 were made by non-Canadians, according to communications obtained by Global News through Access to Information.
A few months after the ban was put into place more exemptions were added. These included students, first-time buyers and properties under $500,000.
“There were so many exemptions to the foreign buyer ban that it really didn’t make any difference at all,” said Tim Sabitov of Team 3000 Realty Ltd, in Vancouver.
Any impacts of the ban were short-lived, according to Brendon Ogmundson, the chief economist for the B.C. Real Estate Association. “The foreign buyer ban was more political than economic policy or housing policy,” he said.
This year, Toronto’s market has softened, but the average home price is still $1.1-million — and the typical price of a home in Vancouver was $1.2-million in September, according to data from the Toronto Regional Real Estate Board (TRREB) and the Canadian Real Estate Association (CREA).
Even as Canadian home sales fell off in October, the average sale price rose 1.8 per cent that month, compared to the same period in 2022, according to the CREA. It was up 5.8 per cent in Vancouver, with the benchmark price for a detached home rising to $2,001,400, according to the Real Estate Board of Greater Vancouver (REBGV).
Though the number of home sales fell off in the month of October, the average price of homes rose, according to data from the Canadian Real Estate Association. (Ben Nelms/CBC)
Some success
In 2016, B.C. introduced speculation and vacancy or empty homes taxes. Ontario followed the next year. These taxes were applied to high-demand areas to discourage people from buying property as an investment.
Thomas Davidoff, an associate professor at the University of British Columbia’s Sauder School of Business, and UBC PhD student Keling Zheng studied the effect of foreign buyer taxes in B.C. and Toronto and found they resulted in an initial drop in the price of housing that soon levelled off.
The city of Vancouver says CMHC data showed that speculation taxes helped cool the market and convert vacant properties into long-term rentals between 2017 and 2021.
On Tuesday, Ottawa announced new measures intended to help Canadians with the affordability crisis, including funding for new affordable homes and a new “Canadian Mortgage Charter,” which the government says will give homeowners new rights when facing a mortgage renewal. Meanwhile, the B.C. government has been introducing its own slew of housing-related policies, including a crackdown on short-term rentals. Dustin Miller, a real estate broker from Victoria, joins CBC’s Tanya Fletcher to talk about the immediate aftermath of the province’s new regulations.
Based on that success, B.C. has expanded the speculation tax program to 59 municipalities and the federal government is adopting many provincial policies encouraging transit-oriented and multi-unit developments, according to B.C.’s housing minister Ravi Kahlon.
“The Federal housing minister just recently went to Toronto Council and said, ‘Adopt what British Columbia is doing,’ ” Kahlon told CBC in Victoria on Nov. 30.
“We’re not waiting for the federal government. We’re taking action here already.”
According to Davidoff, high-end home prices did plummet initially after the foreign buyers ban — but he says the real driver was soaring interest rates that triggered an economic slowdown.
“The most affordable products actually rose in price for whatever reasons after the foreign buyer tax.”
There are still units for sale in this 43-storey luxury West End Vancouver condo, the Alberni by Japanese architect Kengo Kuma. Experts say that though high-end home prices did plummet after the ban on foreign buyers was instituted, the real driver was soaring interest rates. (Andrew Lee/CBC)
He says he’s not sure focusing only on foreign buyers helps make things more affordable and believes the focus should be on how a property is used — not who owns it.
Mike Stewart, a realtor with Vancouver New Condos, says “the ban was maybe a way for certain federal politicians to do better at the next election as opposed to trying to help housing affordability.”
Canada’s ban ‘full of holes,’ critics say
Those who do advocate for taxes and bans say they need to be tougher to work.
“Canada’s ban was full of holes,” said Andy Yan, director of the City Program, a continuing education program focusing on urban planning and development at Simon Fraser University. “I would tell people it was more like cheesecloth than duct tape.”
Yan says places like Hong Kong and Singapore use much higher taxes and rigid buyer restrictions to cool prices.
The foreign buyer ban came long after speculation taxes already discouraged non-resident property investors in B.C., he and other housing experts note. And the country has other problems.
Stagnant wages, a lack of affordable housing stock and a legacy of attracting global property investors due to weak regulations all feed the affordability problem, according to David Ley, author of Housing Booms in Gateway Cities.
The retired UBC Urban Geography professor says Canada could learn from success stories like Singapore, which boasted one of the highest home ownership rates in the world in 2022 at 89 per cent.
A rapid transit train passes a public housing construction site in Singapore on Oct. 21, 2022. About 80 per cent of Singapore’s housing stock is public. (Roslan Rahman/AFP/Getty Images)
“Singapore has solved its housing question. Now, how many cities in the world could we say that of?” asked Ley.
He credits Singapore’s success to aggressive speculation taxes — 60 per cent compared to B.C.’s 25 per cent — and the use of those taxes to create robust public housing stocks.
Singapore’s housing is 80 per cent public, compared to Canada’s, which sits closer to six per cent.
Ley says Singapore controls “investor play” in the housing market “so there is opportunity for local buyers to be successful.”
Back in Vancouver, Wallace and Ali are still hunting for a condo, for they say many are priced too high, especially given today’s interest rates.
“Most of the building owners seem financially able to sit tight and wait. Which is frustrating for buyers,” said Wallace.
Kris Wallace and Andy Ali say they’re still looking for a new condo in Vancouver, but they’re finding many they feel are too expensive, especially considering how high interest rates are. (Ben Nelms/CBC)
TORONTO – Ontario is pushing through several bills with little or no debate, which the government house leader says is due to a short legislative sitting.
The government has significantly reduced debate and committee time on the proposed law that would force municipalities to seek permission to install bike lanes when they would remove a car lane.
It also passed the fall economic statement that contains legislation to send out $200 cheques to taxpayers with reduced debating time.
The province tabled a bill Wednesday afternoon that would extend the per-vote subsidy program, which funnels money to political parties, until 2027.
That bill passed third reading Thursday morning with no debate and is awaiting royal assent.
Government House Leader Steve Clark did not answer a question about whether the province is speeding up passage of the bills in order to have an election in the spring, which Premier Doug Ford has not ruled out.
This report by The Canadian Press was first published Nov. 7, 2024.
