Political inaction at the root of affordability crisis – study

by Ephraim Vecina18 May 2016
A lack of political will has allowed foreigners to garner undue influence and essentially price domestic buyers out of Canada’s real estate markets, a recent study argued.
The report by Josh Gordon, an assistant professor at the Simon Fraser University’s School of Public Policy, placed the blame for the affordability crisis on the unwillingness of the federal administration in general, and the British Columbia government in particular, to limit the inbound flow of foreign money.
Overseas buyers’ access to enormous funds has virtually removed local buyers from the game, and decisive government intervention is in order to level the playing field, the study said.
“People recognize what’s going on, and they’re willing to call a spade a spade,” Gordon said in the report, as quoted by the Financial Post.
“By linking the crisis unambiguously to foreign ownership and investment, documenting the major harms of the affordability crisis, and proposing a policy route out of the current mess, the report hopes to harness the city’s resentment and dispel its resignation,” he added, stressing the crucial role that informed residents could play in making their leaders act promptly.
Gordon noted that the knee-jerk allegations of racism when the prominence of wealthy Chinese investors in Vancouver’s housing sector is raised have clouded the discourse, preventing authorities from holding foreign nationals accountable for unrestrained home price growth.
“[This] is where the evidence points, not because of some anti-Chinese animus,” the analyst said.
According to the city’s real estate board, the average price of a single-detached house in Vancouver swelled by 30 per cent on a year-over-year basis to breach the $1.4-million-mark last month.


  • by Mark Ranger - RE/MAX Kelowna 5/18/2016 11:04:55 AM

    A good solution would be, as I understand they are doing in Australia; allow foreigners' to purchase Canadian real estate with the strict stipulation that in order to do so it MUST be newly constructed for their specific use. In doing so it would alleviate that increased demand that causes prices to increase beyond residents ability to compete, add to inventory (more inventory = more stable prices) and stimulate domestic employment.

  • by Maxy 5/18/2016 11:23:55 AM

    Point well made. However, people who impute racism should not be blamed either because those who complain about the issue made it sound like it is a race issue. This is not to suggest that I subscribe to the so called knee jerk shouts of racism. The issue is solely economics and "market forces" and not racism. We preach unscrupulous free market practices. When it goes sour, we blame the government. When any government threatens to regulate real estate market, in particular, or any sector in general, a segment of our citizens shouts "Socialism does not belong here". We want to eat our cake and have it at the same time. Thanks to the professor for reigniting this debate. It is neither racism nor government fault. Capitalism has its benefits but when allowed free ride on society, capitalism can be very ugly. We are now seeing the ugly side of capitalism and unregulated "free" market.

  • by James Oberian 5/18/2016 12:46:01 PM

    ...didn't Churchill say that "capitalism is the best system in the world with the exception of all the others"? Something like that. I am an avowed capitalist but there are "abnormal" times when government must intervene. We do it with interest rates to stimulate or dampen the economy. In this very unusual situation our federal and provincial governments must act (as they did in Australia) to ensure that at least some of our real estate (which after all is not just a commodity but where we LIVE) is left affordable for our own people, especially our kids...and in politically correct Canada, very few are bringing up the "dirty" aspect of much of this money. Read the Globe story about RE/MAX agent Layla Yang and what she was RECORDED to have said to a potential buyer who didn't want to be forced into a bidding war - it's quite scary...

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