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Want Vancouver real estate to get cheaper?
Raze the mountains, fill in the ocean, build a wall around it to stop any more people from coming, and sabotage the economy.
Those were the innovative suggestions urban economists offered when asked what they thought of a hot-button debate that popped up Thursday on a popular online forum about London, England’s possible move to introduce a capital gains tax on foreign property investment.
The post on Vancouver’s Reddit forum, which asked, “Should Vancouver do the same?”, garnered hundreds of “upvotes” and comments.
“Yes!” posted one commenter. “Doesn’t Australia have something similar?” – (it does) – “Won’t ever happen here though, too many people with their finger in the pie.”
Despite a lack of rock-solid data on the role of foreign real estate investment in Canadian housing prices, since it is not explicitly tracked, local experts who have looked into it using proxy data have been saying for years that it is not a significant driver in Vancouver.
“One of the myths we see in Vancouver is this idea that foreign investors are driving the market place,” said Cameron Muir, chief economist at the B.C. Real Estate Association.
“The stats really suggest that anywhere from one to four per cent of home sales in any given month are to foreign investors. I think often times what’s mistaken for foreign investors are, in fact, recent immigrants.”
He said the tax under consideration across the pond is a political reaction to very different market forces, since London is a “world city” and much more of a playground for the “uber-rich” than Vancouver — pretty and outdoorsy as it is.
Some recent stats are telling: London house prices rose by 9.7 percent between July 2012 and July 2013, according to Britain’s Office for National Statistics. During a similar period, from November 2012 to November 2013, Vancouver’s prices only rose by one per cent, according to the Real Estate Board of Greater Vancouver.
Reached by phone in Zurich, Switzerland on Thursday, Tsur Somerville, a professor of urban economics and real estate at UBC’s Sauder School of Business, said the only thing beside self-sabotage that can be done to make Vancouver real estate more affordable is to perhaps streamline the approval processes that restrict the construction of new supply.
“If you have a place with 40,000 people moving here a year and you don’t have any land, it’s not going to be affordable,” he said, “as long as people keep coming here.”
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