Regional approach would be more effective in solving Canada’s housing woes

by Ephraim Vecina19 Sep 2016
Any government interventions in cooling down the Canadian housing market must be tailored to the specific needs of each market rather than being all-encompassing measures such as national interest rate hikes, according to the head of the International Monetary Fund.
 
“That calls for, clearly, very, very specific policies,” IMF managing director Christine Lagarde stated last week after meeting with Prime Minister Justin Trudeau, as quoted by The Globe and Mail.
 
“I would suggest that macroprudential measures by the banks under the authority of the central bank is certainly one good avenue to explore in order to keep control over the housing markets and avoid excesses,” Lagarde added.
 
On September 13, Trudeau confirmed that federal, provincial, and municipal officials are working on possible solutions to the seemingly non-stop housing price growth in Canada’s most overheated markets.
 
“One of the challenges people are facing in markets like Vancouver and Toronto is increasing home prices, and what we are looking at – in partnership with the provinces and the municipalities – are ways to ensure that Canadians are able to afford their homes,” Trudeau said.
 
The Prime Minister confirmed that he has granted an extra $444 million for the Canada Revenue Agency’s use in this year’s budget to ensure the “continued enforcement of the tax code” in order to “[crack] down on people who are avoiding paying their fair share of taxes.”
 
Observers have welcomed the statements, which came in the wake of Vancouver and Toronto prices reaching record heights over the past few years.
 
“[The IMF] is recognizing openly that traditional measures to cool housing – i.e. interest rate hikes – are really not an option at this point,” Bank of Montreal chief economist Doug Porter said. “It sounds very much like [Lagarde] is suggesting that lending standards could be tightened, under the broad guidance of the central bank.”
 
Earlier this month, Finance Minister Bill Morneau said that officials are considering all possible options in moderating Canada’s hottest real estate markets without stifling activity in other regions.
 

COMMENTS

  • by Richard 9/19/2016 11:24:31 AM

    Really agree, definitely need measures need apply regionally.

  • by Sean 9/19/2016 3:17:20 PM

    Typical of our governments, especially Provincial, to dream up ludicrous bandaid solutions that are knee jerk reactions to a much bigger, national issue. Finally, after numerous years of foreign 'money laundering realities' our elected representatives are waking up to the fact that housing issues are much more wide spread than initially thought. And what does our illustrious provincial leaders do? They pass legislation to in act a 15% extra foreign buyers tax in Vancouver and only Vancouver. Really, that's going to solve the problem!! These buyers 'money launderers' don't care where they hide their money. They are now severely impacting interior market place prices (Kelowna & other Okanagan locations) and moving their 'illegal investing' to numerous other locations that are not part of this 'foreign tax fiasco'. Again, what are our leaders considering? Increasing bank lending/mortgage rates, CMHC qualification requirements, etc.etc. Will these measures impact foreign buyers who launder cash for their acquisitions? Of course not!! These measures only hurt our Canadian, tax paying, residents and citizens especially our younger generations who are being forced to flee these crazy priced markets, like Vancouver, just to be able to live and perhaps realize their own dreams of owning a small piece of the real estate pie. Have any of our leaders considered the fact that our future generations will not have the opportunities to fulfill their dreams and aspirations because our antiquated laws allow 'foreigners' to devastate an industry that is integral to our economic success? As earlier noted, our younger generations are being forced to move to other 'maybe affordable' locations. We are loosing these well educated, tax paying, professionals who contribute a great deal to our Canadian economy because our governments are allowing the 'rape' of our housing industry without protective controls. The federal government is now putting up an additional $444 Million, of tax payers funds, to enable the CRA to further investigate money laundering and tax avoidance schemes that are plaguing our industry and the economy. Why? Is it not feasible to consider passing legislation that prevents non residents from acquiring real estate holdings in BC or Canada for that matter? If they want to invest here then live here, legally! Yes, this is extreme and so 'not Canadian' from a politically correct point of view but this serious issue is not regional. It is national and it is global. Other countries have in acted laws to stifle this type of illegal activity. Just try and purchase real estate in the countries that some of these foreigners call home. Good luck!

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