The real estate industry may soon get a better sense of how much foreign money is currently locked into the housing market – and brokers argue that should lead to restrictions on that ownership.
“I would say limiting the number of properties foreigners can own per person and per corporation would be a good place to start,” Allan Kates, vice president of Verico
Northwood Mortgage, told MortgageBrokerNews.ca. “A lot of these buyers are coming in with cash, so the government can’t just put any mortgage restrictions in place.”
If re-elected, Stephen Harper has pledged half a million dollars to collect information on foreign investment in Canada’s housing market, and a number of economists are lending their support for the initiative.
“Regardless of who wins this election, this is something that we desperately need,” CIBC Economist Benjamin Tal told CP, noting that some measures could be implemented to limit foreign ownership.
And while industry experts have yet to provide details on what sort of restrictions could be put in place, brokers are already speculating.
“They have to vet the buyers a little better, find out reasons for purchase and maybe limit how much money they can pull out of the country once they sell if it’s an investment purchase,” Nicholas Salloum of Mortgage Architects
River City Financial, told MortgageBrokerNews.ca. “They could also tax them once they sell; make them pay capital gains right then and there.”
Brokers would likely support these sorts of restrictions, considering very few of these buyers use their services. Many also fear foreign money is inflating property values and shutting many Canadians out of the market, which cuts into potential broker volumes.
A number of pundits and industry associations have called for more information on foreign investment; most recently a University of Alberta researcher.
“A highly contested issue in the controversy has been the collection of data on foreign real estate investment in Canada, along with differing assessments of the prevalence and characteristics of such investments,” Kerry Sun of the China Institute at the University of Alberta wrote in a recently released report entitled Foreign Investment in Real Estate In Canada Key Issues
. “In Canada, no formal mechanism exists to track the level of foreign investment in real estate, leading to much uncertainty on related matters (and) without an official measure, it is difficult to develop reliable conclusions about the effects of foreign investment in the real estate market and verify potentially tendentious claims.”