A UBC professor says the lack of government control over foreign real estate investment in Vancouver is surprising, because other cities that have a large amount of foreign ownership have measures to control soaring housing prices.
"This is quite unusual for government to have a hands-off position to an important public need," said David Ley, a UBC geography professor who has studied five cities with housing bubbles, including Hong Kong, Singapore, Sydney, London, and Vancouver.
"In other countries there is a much more active attempt to respond to the shelter needs of citizens," said Ley.
- Foreign ownership on Vancouver real estate needs 'creative' policies: David Mulroney
- Average Canadian home price is $440K - what will that buy?
A recent report ranked Vancouver second among the least-affordable major metropolitan housing markets worldwide.
Ley said one of the challenges is that data is not being collected, so any time there is a complaint about foreign investment, the government says it is purely anecdotal.
"I could tell you in percentage terms the shares of foreign buyers in other cities I am looking at. We know the percentage of overseas buyers, we even know where they are coming from. Here you need to piece things together," said Ley. "It has been demonstrated beyond doubt, because they have the data, that overseas investment is a key factor."
While there is no 'silver bullet' solution, Ley said Canada could learn from Australia and other governments that have put in measures to control foreign investment. The Australian government recently announced foreigners who purchase homes illegally could face jail time and fines up to $600,000. Hong Kong penalizes mainland China buyers, while London has a capital gains tax.
"The federal and provincial government is missing in action," said Ley. "The municipal government with very limited resources is aware of the problem and trying to address the problem through a variety of means, but clearly they do not have the taxation capacity to get involved in the scale we need."
Ley said the future outlook isn't promising, unless there is intervention.
"Things are going to get worse because our dollar is depreciating close to 20 per cent, which means for overseas investors, our property has just become 20 per cent cheaper," said Ley.
To hear the full interview with David Ley, listen to the audio labelled Impact of foreign ownership