by David Korzinski | January 29, 2018 7:30 pm
January 30, 2018
For years, observers of Metro Vancouver’s runaway housing market have debated the extent to which foreign buyers are to blame for driving up the cost of real estate in the region – and have searched for empirical data to back-up the available anecdotal evidence.
Last month, people on both sides of the debate – those who argue that foreign capital is the key driver of rising home prices and those who argue that its influence has been dramatically overstated – got new data to support their respective positions.
Statistics Canada’s first complete dataset on “non-resident ownership” of real estate in Metro Vancouver and the Greater Toronto Area provides additional evidence for those arguing that foreign money is mostly to blame. It’s the most comprehensive data on this issue so far, and it finds a higher percentage of real estate owned by people living outside of Canada than previous studies from the CMHC. Indeed, the number of foreign-owned condominiums in Metro Vancouver in Statistics Canada’s report is more than twice as high as the CMHC’s estimate.
That said, those who believe the influence of foreign capital has been mostly overblown have also taken solace in the Statscan data. The federal statistics agency concluded that 4.8 per cent of all residential properties in Metro Vancouver and 3.4 per cent in the GTA are owned by people who don’t currently live in Canada. Those numbers are relatively low, considering the degree to which the Vancouver debate, especially, has focused on the foreign-buyer issue.
In fact, since the data was released, much of the media coverage of it has focused on the ways in which Statistics Canada may still be under-counting the number of foreign buyers – for example, by counting Canadian-based corporations that own real estate as “resident owners,” despite the relative ease with which a non-resident could set up such a company.
Statscan itself says the data is “the tip of the iceberg,” and that even more data will be released in the coming months.
Whatever the real number of non-resident owners in Metro Vancouver turns out to be, people who live in the region have long been convinced that foreign investors deserve most of the blame.
When the Angus Reid Institute conducted its first comprehensive poll on housing in the region in 2015, nearly two-thirds (64%) said “foreigners investing in this real estate market” were one of the main causes of high housing prices. No other explanation topped 45 per cent.
The story was much the same in mid-2016, when ARI asked the same question. This time, 65 per cent blamed foreign investors, and other explanations dropped to 41 per cent or lower:
The perception that foreign ownership is the biggest driver of high prices led the B.C. government to introduce a 15 per cent property-transfer tax on buyers in Metro Vancouver who are not Canadian citizens or permanent residents.
The move was overwhelmingly popular, with 90 per cent of metro residents saying they supported it in ARI’s July 2016 poll.
The measure also proved to be effective – at least for a little while. Prices dropped for five months, but began to rebound in early 2017 and have continued climbing. This recovery has continued even as the province’s data on buyer residency suggests that the proportion of sales to non-residents has remained at 5 per cent or lower since the tax was introduced. It was considerably higher before the tax.
The continued growth in prices even as every statistical measure of foreign ownership remains relatively low suggests two possibilities: Either foreign money is less of a factor in the skewing of the Metro Vancouver housing market than many have assumed, or foreign investors are still being significantly under-counted in both federal and provincial statistics.
In either scenario, it would seem that Metro Vancouverites were right to be skeptical of the efficacy of the foreign-buyers tax, even as they supported it overwhelmingly.
While six-in-ten (58%) told ARI they expected the 15-per-cent tax to be effective at improving access to the real estate market for local buyers, only 6 per cent said they thought it would be “highly effective” at doing so:
Clearly, more needs to be done to improve housing affordability in Metro Vancouver, and ARI data suggests governments have a fair amount of leeway to do so. Three-quarters of British Columbians (74%) wanted government to get more involved in the housing market when ARI last asked, and a plurality of Metro Vancouver residents (43%) were actually rooting for the market to crash. This includes nearly three-quarters of renters, and a significant number of homeowners themselves:
With the provincial government promising a focus on housing affordability in its upcoming budget and the federal government beginning to implement its National Housing Strategy – not to mention more Statistics Canada data to come – 2018 seems likely to be a year of significant developments on the housing file. The Angus Reid Institute will continue to gauge public opinion on these developments in B.C. and across the country as they happen.
Source URL: http://angusreid.org/foreign-buyers-vancouver/
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