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Comment by dontparticipate | Hacker News Reader

Maybe I don't know enough about how this works in Canada in particular, but will this do anything? I thought a lot of the issue was from housing as an investment vehicle, and not specifically foreign investment. And are foreign investors really buying the real estate directly, or are they purchasing REITs and the trusts are buying them on their behalf (laundering the "foreignness" of the investment)?

And, as always, what does this do to address housing supply? Are foreigners also restricted from investing in new construction which might actually lower or slow housing costs?

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We had this in New Zealand a few years ago too. Prices kept climbing regardless (in my area, prices have doubled in the 3 years since the ban). The real problem is normal owner-occupier homebuyers since they do most of the buying. But they're also the common people and the "victims" so they can't easily blame themselves for their own greed and need a scapegoat like foreigners or investors.

I feel that normal people just don't have anywhere to invest. People are scared of inflation. Don't trust other financial investments, like stocks. They're putting money into buying 2nd, 3rd and 4th homes to rent out.

If that’s the case, with enough housing supply prices would be stable. Both can’t be true however.

Not entirely. In NZ, people really favor single family homes near or in big cities. That just doesn't scale because of finite land. Nobody wants to settle for a duplex or worse, an apartment. Perhaps eventually prices for those high density homes will be stable and single-family-home owners will be super rich.

I don't know if the "most people want a single family home" thing is entirely accurate. Hobsonville Point is mostly terraced housing, duplexes and apartments and prices there are well above the surrounding mostly-single-family-home suburbs. I realize there are other reasons for high prices, like local schools, age of housing, etc, but I think it shows that the demand for medium density is there. It's just no one has been building any medium density housing in the last 50 years, and until the recent changes to the Auckland Unitary Plan, it was very difficult to re-develop existing single-family lots.

Perhaps Auckland has already reached the point where people have stopped caring and downgraded their expectations. Actually, Wellington too seems to recently have prices for attached townhouses approaching those of SFHs. A couple of years ago, the ratio of the two types of prices was greater.

Well yes, there’s always been more desirable properties. Location, location, location, and now especially? SFH.

I guess I wasn't clear that the popular outrage over prices is about prices of SFHs. People aren't accepting the possibility of having to buy an apartment like people in big cities all over the world do. Expectations haven't caught up with demographic changes.

Buying expensive apartments and letting them sit vacant for money laundering purposes is a well-known phenomenon by now. This has significant effects on prices from increased demand, while also a detriment to resulting empty neighborhoods.

Foreign investment of construction is a thing but I’ve not seen any studies on the net effect.

Any data to back that up ("significant effects on prices")? Otherwise it may just be news-hyped outrage mongering.

Don’t need data to prove basic economics at this point. The question left is, does it happen with enough frequency to be a major factor?

I’m not that familiar with the market in Vancouver, however they did pass a law regarding vacancy I believe. Perhaps a local could chime in on efficacy.

As an economist, I would strongly object to the idea that data isn't needed to prove points. I've heard about the particular case of the Vancouver market being popular with overseas buyers, but that doesn't absolve anyone from quantifying it.

The Vancouver specific reaction has been the "Empty Homes Tax" https://vancouver.ca/home-property-development/empty-homes-t...

And according to Vancouver again, while the tax did cause a drop in empty houses declared, in every neighborhood except West End they represent less than 1% of total housing supply )https://vancouver.ca/news-calendar/more-vancouver-homes-occu...) and in most cases less than 0.5% of housing supply.

So while this may be an issue, it doesn't appear to be the issue and it seems that the basic economics here suggest that the issue in Vancouver was not limited to foreign investment. It would appear that in the Vancouver case, this ban on foreign homes would in fact be ineffective since it represents such a small share of housing.

Didn’t mean to imply data is never needed. However there is more than one layer to the question.

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