Brokers may not want foreign investment controlled

Brokers may not want foreign investment controlled

Brokers may not want foreign investment controlled Any government intervention aimed at stemming foreign buyers may not deter such investment -- but it could impact Canadians, according to one leading economist.

The Bank of Canada said Wednesday it’s concerned about inflated housing markets, and one leading economist believes a policy response is imminent. 

“The policy response is likely to come, not so much from the Bank of Canada; the policy response will be in terms of enforcing money laundering regulations,” Dr. Sherry Cooper, chief economist with Dominion Lending Centres, told REP. “But I don’t think that’s going to have a big effect.”

The reason any policy change won’t have an impact, according to Cooper, is because the foreign money flooding markets such as Toronto and Vancouver isn’t being laundered.

“The definition of money laundering is money earned through illegal activity or money to support fund terrorism,” Cooper said. “I would guess that the bulk of Chinese investment in Canadian real estate is not garnered from illegal activity and it’s certainly not an effort to finance terrorism, so that’s not going to do it.”

Cooper said she hopes the government avoids policy meant to curb foreign investment.

“We know the government is supporting the gathering of data so we learn more about the size of foreign inflow is, but that doesn’t change anything either,” Cooper said. “I’m hoping the government tiptoes around this because we don’t want to curb the inflow of money entirely because it would lead to a collapse in house prices. Or it could at least lead to it.”

Cooling the housing market by minimizing foreign investment would result in lower prices, according to Cooper, who argues that would be a negative due to the fact that 70% of Canadians own homes and the vast majority of those rely on home ownership as their largest portion of personal wealth.