Vancouver’s housing mania seems to be undermining its economy. Who wants to take a job, or run a business, in the city when the average price for a house is nearly $800,000 and the carrying costs are 70% of the average household’s income (as noted in my column)?
Buyers from mainland China are bidding up prices—at least that’s what real estate agents are reporting. This foreign buying has motivated a former city councillor, Peter Ladner, to put forward the idea of restricting foreign ownership of real estate.
Precedents exist. Manitoba, Saskatchewan, Alberta and PEI prevent non-residents from buying land. So do other countries, such as Hong Kong, Australia and China.
But a ban on foreign ownership could spook the market and cause panic selling. Moreover, in the years ahead, selling pressures will climb in the housing market as Boomers retire and sell their residences.
It might be better to allow foreign ownership but subject to a ceiling set to keep the market from swinging between the extremes of panic and mania.