“I can only speak for West Vancouver and our market is driven by the Chinese buyer and they’re very astute people,” explains Clarence Debelle, who focuses on foreign buyers. “If one destination becomes too much of a challenge for them, then they will look for another destination.”
In Vancouver in particular, much has been made of the impact of foreign ownership on the city’s real estate prices. The West Coast market has been called the second most unaffordable market in the world, with prices for a detached home in the city long ago surpassing $1 million.
Similar issues in Australia prompted the government there to impose an application fee for non-Australians looking to purchase property. Those fees start at AUD $5,000 for properties up to AUD $1 million in price, and get even steeper for higher-end properties.
Buyers who flout those rules, however, could face fines up to AUD $127,500 or up to three years in jail.
According to the New York Times, Tony Abbott, the Australian prime minister, told reporters in Sydney the new law is an effort to keep real estate affordable for nationals.
“We want to ensure that illegal foreign investment is not unnecessarily driving up prices,” he said. “We want to maximize the opportunities for Australians to buy a home at the best possible price.”
However, Debelle says countries should welcome capital from any part of the world – invested capital is good for the country, he says.
“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,” Debelle argues. “It enhances their retirement and gives them more capital to leave for their children.”
He also points to the work these investors often provide for locals – most often in the construction of new homes.
Still, Debelle says governmental policies like the one in Australia have no place in the Great White North.
“We should also be receptive to allowing people from any parts of the world – regardless of origin – to become part of Canada, provided they meet the requirements all immigrants have to meet,” he says. “That is the essence of Canada; it’s not an exclusionary country.”
Like the butterfly effect, one country’s foreign investor policy could impact Canada’s real estate market, say experts, funnelling more buyers to already-hot markets across the country.