Don’t blame foreign investors for impacting the real estate market and elevating prices in Metro Vancouver, argues a new report from the British Columbia Real Estate Association.
“Recent news stories have focused on the foreign buyer segment of the market, concluding that foreign investors are unduly inflating home values and driving potential domestic buyers out of the housing market, especially those looking to purchase their first home,” the report reads.
“However, there is data and analyses from a number of sources that point to foreign investment as insufficient to impact a market as large and diverse as Metro Vancouver, save for a small segment of luxury homes.”
The report also alleges that land scarcity and densification policies in the Greater Vancouver Area has put significant pressure on single-detached home values, while highlighting that domestic investors are “three to four times more active in the region’s housing market than foreign investors.”
The news comes as many real estate agents tout the advantages of foreign investment as a key reason for elevated house prices in Vancouver while highlighting the positive impacts they present to the economy.
“I can only speak for West Vancouver," Clarence Debelle, who focuses on foreign buyers, told REP. "Our market is driven by the Chinese buyer and they’re very astute people.
"For every home I sell owned by a local person, they’re walking away with a lot more money than they would have four years ago. It enhances their retirement and gives them more capital to leave for their children.”
However, other agents have been calling for a crackdown on foreign investment, pointing to a model used in Australia to keep the market from overheating.
“I think it’s something to consider because real estate is meant to serve local [populations], serve people who live in Canada,” said David Oey, an agent in Toronto, adding that an increase in foreign ownership could create a speculative market.
“It was the same question for mortgage rates five or six years ago,” he added. “Canada is a leader in maintaining sound fiscal and financial policies, and we should continue that and consider these types of foreign ownership policies that could be beneficial for us.”
BCREA also questioned the use of average home prices as an accurate yardstick for the market, noting 70 per cent of homes sold in Metro Vancouver in 2014 went for below the average of $738,000.