While several observers have suggested possible solutions to the affordability crisis that has been plaguing Canada’s most in-demand housing markets, any step that would seek to address the problem needs to distinguish between the types of foreign investors, according to an industry analyst.
In his blog for HuffPost Business Canada
, lawyer and journalist Ike Awgu stated that foreign investors—a sector that has been blamed by various quarters for ever-rising real estate costs in Vancouver and Toronto—are not a monolithic entity that purchases and uses Canadian homes in the same manner.
“The phrase ‘Foreign Investors’ is much like the word ‘Sports’ -- Golf and Ultimate Fighting are both considered ‘Sports’ yet drastically different; one may leave you with a mortal injury, the other with a sunburn,” Awgu said.
“A money launderer and wealthy entrepreneur from abroad may both be considered ‘Foreign Investors’ with similarly disparate outcomes. A great deal of the former (money launderers) are infiltrating a porous Canadian financial system to purchase real estate in Vancouver and Toronto and have contributed to the out of control housing prices in both cities,” the analyst explained.
Awgu noted that even a cursory look at the situation would reveal that while a large proportion of foreign buyers with access to huge sums are legitimately affluent, others have accumulated their wealth through less-than-ethical means.
“Cities like Vancouver have become places where corrupt Chinese officials can openly flaunt their money. Money that at its core, represents a theft of wealth from the Chinese people, the majority of whom still have an average income of around $10,000 Canadian a year -- or a fifth of what the average Canadian earns,” Awgu wrote, adding that the current climate of inaction on the part of the government is crippling not only Canadian would-be buyers but also Chinese nationals.
“We are turning a blind eye to a massive theft of wealth from poor people on the other side of the world -- and for the most part we are doing it on purpose,” he said.