Could a speculation tax be the key tool to cool down Metro Vancouver’s hot housing prices?
In an unexpected move, Vancouver Mayor Gregor Robertson on Friday said he is calling on the provincial government to take direct action on the region’s unattainable housing market.
“We definitely need taxation tools that discourage speculation on real estate,” said Robertson in a statement. “It’s clear that rampant speculation on real estate is driving up prices in Vancouver.”
“Vancouver needs the B.C. Government to take action on creating a speculation tax and recognize that we need a fair and level playing field to make housing more affordable for residents in Vancouver, and throughout the province.”
Similar taxation policies are already in place in other foreign investment centres, including Singapore and Hong Kong where there are 15 per cent taxes on housing purchased by foreigners.
Australia announced new measures earlier this spring, going as far as implementing new fees, stiff fines and even possible jail time for those who have purchased property illegally.
And this week, New Zealand revealed policy changes that it is curbing foreign investor speculation by introducing a capital gains tax on residential property purchased and sold within two years.
Local real estate marketer Bob Rennie also supports a speculation tax but questions whether foreign ownership is really the problem at hand.
“As we hear increasing debate about ‘foreign ownership’ of housing, it’s important to dispel the myths around Metro Vancouver’s housing market,” said Rennie.
“The truth is that of the four most recent development projects that Rennie Group has worked on, fewer than four per cent of the units were purchased by offshore buyers. We need to ensure that we’re not trying to solve a problem that doesn’t exist.”
The Mayors’ Office’s new policy announcement comes just a week after Premier Christy Clark stated she would not entertain the idea of a tax on foreign real estate investors as she is concerned that “housing prices will drop.”
“That’s good for first-time home buyers but not for anybody who is depending on the equity in their home to maybe get a loan or use that to finance some other projects,” Clark said last week.
But critics have consistently argued that young adults are most susceptible to the effects of unaffordable housing. This is compounded by Vancity Credit Union’s recent study warning of a brain drain exodus and labour market crisis to come if affordability issues and low wages relative to high housing prices are not addressed in the short-term.
Clark’s cabinet minister of housing, Rich Coleman, is equally unconcerned – he told the legislature last week that the province has no plans to collect data on foreign ownership. Coleman went on to compare Metro Vancouver’s housing prices with London and Tokyo, although statistics indicate residents in these global hubs earn far more in wages than what Vancouverites make on average.
There is growing citizen demand for levels of government to intervene on the housing market.
An online petition to place restrictions on foreign ownership has attained over 24,000 signatures in just three weeks. The founder of the online #DontHave1Million campaign is also organizing a rally for affordable housing at the Vancouver Art Gallery plaza beginning at noon on Sunday, May 24.