Home ownership in the soaring real estate market around Vancouver has become a faded dream for many people living in the Vancouver region.
In February of 2015, the “Don’t Have a Million” social media campaign created by Eveline Xia, went viral as people expressed their frustration over being priced out of their hometown.
A public opinion poll last year found that almost half of respondents were “uncomfortable” or “miserable” with the housing and transportation situation they had to settle for.
“The housing market is broken, and we need more rational planning and management of Vancouver’s housing in the interests of local people.” according to a study by Marc Lee, released by the Canadian Centre for Policy Alternatives.
“There are a lot of people who have permanent residency who are not paying taxes in B.C., they are paying it somewhere else.”
New rules were enforced on June 10, demanding buyers reveal their status, whether they are Canadian citizens or permanent residents when filling out a property transfer tax form, for the purchase of a home. Those who are neither are asked to disclose their country of citizenship.
Amid the growing discontent provincial Finance Minister Mike de Jong released the first set of findings on foreign home ownership today.
The preliminary data suggests that in Metro Vancouver five per cent of all real estate purchases were made by foreign buyers, almost all of them Chinese nationals.
This was not news to anyone, and New Democratic Party Leader, John Horgan and the party’s Housing Critic, David Eby, held a news conference this afternoon to demand the government introduce a ‘speculation tax’, a two per cent tax on the assessed home value for those who don’t pay income tax in Canada.
John Horgan says, “self-declaration on a form doesn’t work”. He said Australia discovered this in similar attempts as it does not account numbered companies and blind trusts. Horgan says income tax returns are the only way to understand what is occuring.
He says house values are distored,”because the wealth that’s coming into the market place wasn’t generated here. And so wages have been flat for a decade in the lower mainland and yet costs of housing keep going up almost exponentially over that same period of time,
Horgan said, “We want to discourage that distortion and we want to tax those who are coming in based on greed rather than based on a desire to live and work in British Columbia.”
“Millenial couples have negative income in Metro Vancouver, according Vancity.”
David Eby referred to the Bank of Canada warning in 2011. The BOC addressed the situation in Vancouver then, “and said very clearly that international money coming into the housing market could create the false impression among people in the lower mainland that real estate values will always go up. He said, “It will cause them to leverage themselves heavily to get into that market, that is not a stable market, He says the warning was “incredibly prescient”.
“If you look at the debt levels in metro Vancouver there off the charts. People are hugely in debt, they can’t afford to live. Millenial couples have negative income in Metro Vancouver according Vancity.” said Eby.
John Horgan wants to see co-ordinated action between tax specialists and real estate lawyers. “If people are not participating in the economy you can determine that through the income tax act.” He said, “This is a reasonable approach to try and determine just how graphic this challenge is, and by increasing the cost of that speculation you’re going to dinimish the activity. ‘
Horgan foresees a speculation tax creating revenue to fund other initiatives “like co-op housing, social housing, or encouraging other activities around transit… so that we can have more supply come on stream.”
Across the province foreign buyers made up about three per cent of the 10,000 transactions during the three-week period in which the government had been collecting data.
Finance Minister Mike de Jong said, despite the short period of just 20 days, it is evident that foreign investment is driving up real estate prices.
“It’s certainly a presence,” he told reporters. “It’s real, it is actual and it is factual.”
De Jong cautioned that the data is very preliminary, containing only the information for 20 days. But as far as it goes, he said, it is the most accurate data the government has on the issue of foreign ownership.
David Eby clarified, “The issue isn’t one of citizenship, He said, “There are a lot of people who have permanent residency who are not paying taxes in B.C., they are paying it somewhere else.”