12 Jul Behind The Property Rate Craze In Vancouver
Vancouver presents a paradox for Canadians, and those looking to shift from foreign shores. A nice mix of the best modern urban provisions close to residences, and stunning natural beauty, Vancouver has frequently been rated as one of the best places to live in the world. It has also been rated one of the most expensive neighborhoods.
This leads to acute homelessness issues. City folk have taken to sleeping on pavements at night in wake of the increasing difficulty for any but the rich to put a roof over their heads.
Government Speculation on Property Speculators
The government has its own angle on the issue. Legislations as recent as August 2016 reveal that they believe – or at least want the common home buyer to believe – that those responsible for the current crisis in Vancouver housing live off the shore in global metropolises. They believe that Canada’s famously low interest rates in general – and Vancouver’s quality of life and superior recreational provisions in particular – made the city a natural spot for investments.
These legislations include the introduction of 10-15% tax for foreign buyers, and the Empty Homes Tax, which penalises under-utilization of residential spaces that have a current owner. This latter is aimed at investors who primarily buy houses as security or assets. The government also incentivizes native home owners through state grants.
Of these, the foreign buyers’ tax has been panned by experts and academics. They say that if foreign buyers are behind the spike at all, they’re likely to be able to adjust easily to the extra expenditure.
Investigators like Geoff Dembicki don’t agree with assessments such as those implicitly sponsored by the government.
According to proponents of alternate viewpoints like Geoff, much of the housing crisis is due to domestic speculators, not foreign ones. They argue that the main problem is gentrification. The fact that property rates in Vancouver increased to epic proportions to begin with – probably due to the famously low interest rates mentioned earlier – accords them an odd prestige status. The demand for such spaces increases manifold. Since the rich can catch up most easily, they lap up these properties quickly, and come to attract the attention of investors thereafter. Luxury retailers, of course, bask in the glory of these trends.
The fallout of these trends is not just in terms of luxury housing. The people who miss out on property in cities such as Vancouver do not just miss out on elegant facades. They miss out on opportunities. Studies like Geoff’s reveal that most new jobs in urban Canada were created in about three or four cities like Vancouver with inaccessible property rates.
All in all, trends suggest that economists and experts were right, and that foreign buyer tax is useless. The other implication is that foreign buyers were only a small part of the problem. The real issue is with wealthy domestic speculators cashing in on the effects of gentrification and buying homes as investment – to rent them out sooner or later, or to sell them off later rather than sooner to avail higher returns. The best way out is to put more power into the hands of a broader range of home-buyers.
Housing Statstics in Greater Vancouver