While the dominance of foreign money in Canada’s housing markets is certainly having an effect on prices, the deputy chief economist of CIBC World Markets said that this narrative alone does not give a fully accurate picture of what’s driving the increases.
“Any speculative activity by foreign buyers, we know that’s not a good thing. So we can easily go after that. I am definitely calling for a flipping tax on foreign buyers,” Benjamin Tal told Dan Fumano in a Vancouver Sun
Tal cautioned against falling into the trap of solely focusing on solutions for the foreigner issue, however.
“It’s too simplistic to put all the problems in Vancouver on foreign buyers,” Tal said. “It’s Economics 101 – there is low supply. And there are many people who want to live there. So that’s the number one issue. Foreign buyers is the second thing.”
Tal added that Canadian authorities—which have been lagging behind in terms of information gathering—should start following the example of their Australian counterparts, whose attempts of keeping close tabs on overseas ownership data are already bearing fruit.
“It’s not a secret that we haven’t done a good job of that for the last decade,” Tal stated.
An HSBC study found that Australia has seen price growth in its most overheated markets slow down immensely over the past year, and the trend points to this cooling continuing in the long term.
Since June 2015, Australian authorities have been cracking down on violations of rules concerning foreign property sales, many of which have been conducted illegally.