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Couple articles on foreign money affecting Vancouver Real estate on Vancouver sun today:

Vancouver lacks effective control over rising house prices, prof says

Spoiler!

VANCOUVER -- Vancouver is behind other locales around the world in controlling skyrocketing house prices that are being affected by wealthy foreign buyers snapping up local properties, a University of B.C. professor says.

David Ley, a UBC geography professor, said cities such as Hong Kong, Singapore and London have already taken measures to restrict foreign ownership, such as stamp duties — or a transaction tax — in the Asian countries specifically to target non-local investment, and a capital-gains tax on foreign investments in the UK.

In Australia, overseas buyers will face jail time if they purchase homes illegally, and in the state of Victoria they will also be subject to a new tax equal to about three per cent of the purchase price.

The city of Vancouver, meanwhile, has announced plans to create a database of empty houses and condos to determine how much vacant properties contribute to the city’s affordability crisis.

“We aren’t really doing much of anything here at present, which puts us out of phase with most other cities,” Ley said. “As soon as any national group is mentioned, developers and the government say this is a xenophobic problem and we’re not paying attention to it. We need to know more about the investment. Is it coming from the region, the rest of Canada or outside Canada? We know there’s a high level of investment from outside Canada.”

The B.C. and federal governments had little to say about whether they would consider similar measures to what is happening elsewhere. The federal government said it does not speculate on possible policy decisions, while the B.C. government wanted more information to determine which ministry would be responsible.

In Australia, where overseas buyers are only allowed to purchase newly built homes and need the permission of the Foreign Investment Review Board, Prime Minister Tony Abbott announced this week that foreigners buying houses in that country will face jail time if they purchase homes illegally. The move is aimed at tightening scrutiny on overseas buyers at a time when record-low interest rates are driving up Sydney property prices five times faster than wages.

Approved overseas purchases of Australian homes more than doubled to A$34.7 billion ($32.9 billion in Canadian currency) in the year ended in June, mostly to Chinese buyers. House prices in Sydney ranked third among the least-affordable major metropolitan housing markets worldwide, after Hong Kong and Vancouver, according to a report in January by Demographia.

Ley noted Vancouver can likely expect more foreign investment, given Canada’s plunging Canadian dollar. This will continue to drive up the market, he notes, while putting homes even further out of reach of local buyers.

Buyers continued to snatch up homes in Metro Vancouver last month, and realtors are warning that the region’s real estate demand is outpacing the supply.

The number of all types of residential property sales last month was up 37 per cent over April 2014 to 4,179, according to the Real Estate Board of Greater Vancouver. Meanwhile, the number of new listings was down 0.9 per cent compared to a year earlier.

A total of 12,436 greater Vancouver homes are listed for sale on the Multiple Listing Service, down 0.5 per cent from March’s numbers and 19.8 per cent since April 2014.

Ley noted said it will be up to all three levels of government to bring in new regulations, which could mean similar measures to those in London and Hong, or possibly eliminating the property transfer tax for local buyers. Parts of Canada, such as Saskatchewan and P.E.I., already keep tabs on foreign ownership in the Agricultural Land Reserve, he added, and questions if this might be something that can be done on an urban basis.

“What you will be told, from the provincial government, and probably the feds, they are very keen to be part of the global market and don’t want to turn investment away,” Ley said.

Premier Christy Clark had said in February that when the province balances its budget and starts “making a dent on our debt,” it will start knocking down the property transfer tax because “it’s a drain on our economy.”

“Its one thing we can do to try to increase affordability,” she said at the time. “We’re not quite in a position to be able to do that yet but it is absolutely part of our long-term plan to get rid of it because it’s not good for affordability in B.C.”

Ley noted that the measures likely wouldn’t have a significant impact on the economy, noting that despite the limits in Hong Kong, for example, demand for property remains high. “The most likely thing to happen will be a cooling off what is a really hot housing market.”



Read more: Vancouver lacks effective control over rising house prices, prof says

Barbara Yaffe: Is it time to restrict foreign property buyers?

Spoiler!

As housing becomes pricier, Vancouverites are growing more sensitive about foreign influences, wanting to know what their politicians are doing to protect local interests.

The answer, to date, is pretty much nothing.

This, even as Australia’s prime minister has just announced plans to jail foreigners who purchase homes in contravention of that country’s stiff foreign investment rules on property purchases.

Closer to home, former B.C. cabinet minister and co-chair of Vancouver Mayor Gregor Robertson’s 2012 task force on affordable housing, Olga Ilich, says local politicians may not be able to act — even if they wanted to.

(The mixed feelings about action derive from the fact that many of their constituents benefit from and favour foreign property buying.)

Says Ilich: “I don’t think the city can do much without the help of the provincial or federal government, and I don’t think they will step into this willingly, for what they will see as a very localized problem.

“I also don’t think too many politicians want to be accused of racism, which also comes up from time to time.”

During last fall’s municipal election, the idea of taxing vacant properties was raised but subsequently dismissed by Non-Partisan Association mayoral candidate Kirk LaPointe, who said such a strategy would be impossible to enforce.

The city’s Affordable Housing Agency is now “in the early stages” of studying the extent of the problem, says city spokesman Jason Watson.

Bank of Canada Governor Stephen Poloz, during a 2013 visit to Vancouver, told The Vancouver Sun’s editorial board that nothing can be done about foreign ownership; Canada is an open market governed by forces of supply and demand.

The Charter of Rights also may restrict action to limit foreign house buying since coverage extends to anyone stepping on Canadian soil.

Meanwhile, the Charter does nothing to protect rights of locals denied a chance to purchase certain properties marketed exclusively to foreigners.

This happened recently in a sale of $30 million worth of Vancouver property, handled by CBRE Group, a commercial industrial and retail property marketer.

The company announced the sale, noting, “the owners had stipulated to not expose the portfolio to the local Canadian market; as such, we arranged an international marketing campaign and brought the portfolio on the road show.”

The portfolio, says CBRE Group, sold to a foreigner who paid $5 million above market price.

Of course, such stories only increase local anxiety about offshore buyers inflating local property prices.

A 2012 Vancouver Foundation survey by Sentis Market Research revealed that 52 per cent of people think there is “too much foreign ownership of real estate here”.

Among young people, aged 25 to 34 — big first-time homebuyers — 61 per cent held that view.

Among all respondents, 54 per cent agreed that “Vancouver is becoming a resort town for the wealthy”.

I have personally noticed people growing grumpier as prices continue to escalate.

A friend last month buying a Vancouver condominium was annoyed to confront, at the last moment, a competing foreign bidder. As a result, she had to boost her offer by $25,000.

Another friend, living in a detached home in Point Grey, had stern words for a realtor who left him a flyer about strong demand for older homes like his. He wrote the realtor: “I am appalled and disgusted by a marketing tactic that can only add to the toll of destruction in Vancouver’s obscene housing market.”

Directly opposite my Kitsilano property is a neglected-looking vacant lot with an unsightly front yard covered in gravel.

Vancouverites lately have heard about all sorts of property restrictions and taxes being imposed by governments in other hot residential markets, such as Australia’s.

Singapore, Sydney and London have imposed foreign buying restrictions. So, why not here?

It is time for a Vancouver task force to:

• Document the extent of foreign influence here;

• examine the effectiveness of limitations imposed elsewhere;

• and explore Canada’s options for action.