found that opinion is sharply divided among the country’s fiscal movers and shakers on what steps the federal government should take regarding foreign investors, which have been blamed by various observers as mainly responsible for the inflamed housing price growth in Vancouver and Toronto.
Out of the 39 monetary managers polled, 19 said that Ottawa should intervene to cool down the markets. Meanwhile, 16 said that further federal action would only worsen the situation, and the remaining 4 advised the government to be careful and consider all its options before acting one way or the other.
Among the highlights were as follows:
- Paul Tepsich, High Rock Capital managing partner:
“If [Ottawa intervenes in the Vancouver and Toronto housing markets], they will collapse the entire economy as the consumer is way too levered even with house prices climbing.”
- John Kim, Aston Hill Financial portfolio manager:
“Unintended consequences” would ensue if the federal government intervenes in the most overheated markets.
- James Dutkiewicz, Sentry Investments chief investment strategist:
“[Federal officials should] channel their ‘inner Trump’ and find a way to make money from these foreign flows to offset potential costs to the system if prices drop suddenly.” He added that “[foreign buyers are] not price conscious, so there’s an extra five or ten per cent tax or whatever you want to call it, they’re going to pay it because they’re just trying to get the money out of their country.”
Major institutions like BMO have lamented the federal government’s relatively tepid response to foreign buyers, with other analysts echoing this statement and saying that Ottawa isn’t simply doing enough to curb the unrestricted flow of overseas capital into Canada’s real estate sector.