One in five Canadian home purchases is made by an investor
theglobeandmail.com
theglobeandmail.com
All this reminds me of the upcoming bourgeoisie that purchased up the land of France using the fiat currency the assignat. At auction.
Our fiat currency, similar to the assignat, is given value by the auctioning of real estate (or other assets) to the wealthy, so they can feel they have a means to escape inflation. To be paid in hard assets for imaginary numbers.
At the same time. During the revolution, the French monarchy was attempting to reclaim its sovereignty away from the nobility and other ruling interests. Though, it failed and new interests took power.
The Canadian government seems to be pushing towards firm collectivism based on its sole authority. Even the state funded media functions more as a public relations entity, than journalism.
I feel like Canada is at a crossroads. The current system, while seemly robust, is unsustainable and becoming unstable.
But that would go against the current zeitgeist where countries are reduced to economic platforms, that owe their citizens nothing except making them compete against the whole world.
The property was vacant for 12 months in total.
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Basically, anytime a "gooddoer" wants to make a regulation for "gooddoing", they shoot themselves in the foot and make the life for all parties harder in the process.
Problem is of course that local investors simply fill the void left by the foreign ones! haha.
Vancouver housing has continued to spike even after these taxes were introduced.
I still think introducing these demand side policies was a good idea and necessary, but the impact of these policies has been pretty mild.
Other jurisdictions shouldn't expect radical change if they implement similar anti-foreign buying regulations.
In particular, going from one shell-company-friendly administration to a shell-company-skeptical one has motivated foreign investors to move quickly while shell companies are still allowed.
The Federal government of the 1990s got completely out of funding housing, leaving it to the provinces, which not only dramatically reduced social housing construction, but also meant the end of a whole bunch of tax incentives to build purpose built rental apartments. Accordingly the entire market shifted to building condos for individual owners instead of rental apartments.
The business model for condo development is to fund them by pre-sales, often to investors which rent them out and eventually sell.
When I bought my condo in 2009 the amount of units in the building owned by investors was more than 60%. The property manager said this was pretty typical. Over time the percentage of condos owned by investors declines as they're resold and owner occupiers are the more likely buyers of pre-owned condos.
If the government wants housing to be less of an investment and more oriented to being solely a home for owner occupiers, they could pursue incremental taxation on secondary homes (Singapore does this), or higher capital gains on secondary homes.
The unintentional side effect of dissuading housing investors however could be that financing condo development becomes unviable and the condos simply don't get built. With rental vacancy sitting at 1% in Vancouver (not much higher in other Canadian cities) and the Federal government opening the taps to even more immigration, dissuading housing development is not a good idea.
A solution could be addressing the problems induced from the 1990s abandonment of housing by the Federal government, and finding a way to once again make it viable to build purpose built rental housing in this country.