A recent initiative by Vancouver mayor Gregor Robertson to implement a new tax on vacant homes in the city won’t ease the trend of explosive price growth, according to a Calgary-based observer.
In his contribution piece for The Globe and Mail
, author and analyst Mark Milke slammed Robertson’s pitch as just the latest in the string of ill-conceived solutions for the affordability crisis in Canadian housing markets.
The proposal would not be effective as it does not address the fundamental reasons for home price increases, the analyst said.
“The upward price pressure is the result of three factors: low interest rates, strong immigration – including the related effect of wealthy buyers from China looking to park money abroad – and a shortage of housing supply, starting with land,” Milke wrote.
“[Taxes] would do nothing to counteract the effect of low interest rates, high immigration levels or China’s rise in the world economy, which is restructuring housing but also many other markets. Besides, buyers who can already afford million-dollar homes are unlikely to be deterred by what they would see as a trifling new tax,” he added.
Milke also dismissed the growing calls to limit foreign ownership as misguided thinking.
“[That’s] suboptimal and injurious to property rights. Homeowners should have the right to sell their homes to willing buyers, be they from Beijing, Boston or Barrie,” he said.
The solution lies in a sorely neglected aspect of the discussion.
“Overlooked is the supply side,” Milke argued, adding that more extensive development and maintaining green space are not mutually exclusive ventures.
“If Canadians wants moderated price levels for housing, especially over the long term, relief is not likely to come from interest rates or immigration levels. That leaves land supply. Opening it up would help reduce a significant piece of the final price tag for Canada’s single-family homes, townhouses and condominiums.”
Vancouver mayor to tax vacant properties to ease housing market
Added taxes have limited effectiveness in resolving supply problems—Tal