Foreign buyers and investors are largely responsible for the massive gulf between incomes and home prices in Vancouver, according to a new study by Josh Gordon, a professor at Simon Fraser University’s School of Public Policy.
In his analysis of Statistics Canada figures, Gordon found that the Metro Vancouver markets that posted the largest gap between home prices and incomes had “a remarkably strong relationship” with the ones that showed the largest share of homes owned by non-residents.
This is particularly apparent in the most extreme cases like the City of Vancouver and West Vancouver, which both had price-to-incomes ratio of over 30.
Gordon built upon the 2017 study of the late Richard Wozny, who warned at the time that the “extreme disconnect” between home prices and incomes indicated a high likelihood of tax evasion.
The price-income gap might also mean that the taxation system should be updated and tailored to the needs of a market being increasingly burdened by real estate speculation.
“The money that’s being used to purchase or maintain that housing is likely coming from abroad,” Gordon told Star Vancouver.
“We can infer that non-resident ownership typically means foreign ownership, which is ownership primarily based on foreign income and wealth,” he added. “It’s not always tax evasion, but we have tax avoidance happening.”
“This is a way of avoiding taxes that most people think should be paid because the family is residing in Canada and using services.”
Gordon’s fellow Simon Fraser University professor Andy Yan recently stated that Vancouver now hosts a larger share of Chinese property owners compared to any other major Canadian or U.S. city.
Approximately 20% of home owners in Greater Vancouver are Chinese, while another 22% belong to other Asian groups, Yan reported in his analysis of StatsCan data.
These proportions considerably exceed those of Toronto, which only has 11% of its home owners coming from China, although the share of owners from other Asian groups is higher than Vancouver’s, at 24%.