Conservative Party Promises to Study Foreign Ownership in Canada
In a recent campaign pledge (watch here), Stephen Harper announced that a Conservative government would spend $500,000 to collect data on foreign ownership, calling it something “we can and should do something about”. This is a hot button topic as of late and this article aims to explain the issue at hand.
Foreign Ownership in Vancouver
With prices rising at 10% a year or more for single-detached homes in Vancouver, many young families are being priced out of the market – forced to move elsewhere or downgrade their expectations. This has caused many to speculate that foreign investment is a driving force and there has been a growing clamor for legislative steps to be taken. Some have called for -taxes on vacant homes](http://www.theglobeandmail.com/news/british-columbia/green-party-back-vacant-home-tax-proposal-in-vancouver/article20685697/), higher property taxes for foreign owners, or taxes on the purchase of homes by foreigners.
As it stands though, most of the arguments are still based on anecdotal evidence.
What We Know
There have been some attempts at measuring the issue. In 2013, Andy Yan released a study aimed at measuring the number of homes that sit vacant within Vancouver:
- The study used data from the 2011 census to measure the number of condonium apartments that were either “unoccupied” or occupied “by a foreign resident and/or by temporarily present persons” on Census Day 2011, which was May 10
- It was found that 7.7% of condos across the city met this definition, going as high as 23% in some part of downtown, such as Coal Harbour
- All told, there were around 20,000 more homes in Metro Vancouver sitting empty than would be expected given the size of the region.
CMHC has also released a study aimed at measuring foreign ownership in Canada:
- The survey contacted property managers and asked how many of their units were owned by someone whose permanent residence is outside of Canada
- It was found that 3.4% of condominium apartments in the city of Vancouver met these definitions, going as high as 5.8% in the Burrard Peninsula
- Areas outside of the city of Vancouver, including the Fraser Valley, were notably lower
Other Levels of Government
What other levels of government are saying/doing about the issue:
- The mayor of Vancouver has written a letter to the Christy Clark, calling on the Provincial Government to begin collecting data on the issue
- The City of Vancouver is also reportedly working on a website where residents can help the city count and track vacant homes
- The Provincial government has come out against any taxes on foreign ownership, citing concerns regarding the impact on house prices and homeowner equity. What is baffling, however, was their refusal to consider collecting data on the issue.
Well, I suppose that might depend on the results of the election. However, being as most economists agree that the collection of data is a crucial component for any policy-related decisions and that this is a hot-button topic, we expect most other politicians to get on-board.
We have argued in the past that foreign investors are likely not the driving force behind price growth in Vancouver and we find Harper’s sudden push for better data questionable, given that his government took out the mandatory long-form census. That being said, we think this is a wonderful idea and hope that it is implemented regardless of the election results.