We’ve just passed the one year anniversary of Vancouver’s foreign buyers’ tax – and prices are as hot as ever in Metro Vancouver.
That’s prompted some critics to argue the measure had little to no effect.
But one Vancouver housing expert says that’s not the case – and that the tax was hamstrung by the previous BC Liberal government.
LISTEN: Has the 15% foreign buyers tax made an impact on the housing market?
Josh Gordon is an assistant professor at SFU’s School of Public Policy who has written extensively on Metro Vancouver’s housing woes.
In his eyes, the tax hasn’t been given a fair chance.
“You’re holding the tax to a higher standard that other policies aren’t,” Gordon told CKNW’s Steele & Drex.
“Most policies are not expected to be a silver bullet, and yet the foreign buyers’ tax was meant to be a silver bullet according to this logic.”
Gordon said when it was first implemented the tax had its intended effect, with the market cooling and prices dropping for about six months.
“And so in January, prices were down about four per cent in the entire market, and so that was having the impact that [the government] wanted. But then out of nowhere they start introducing demand stimulus.”
That stimulus came in the form of the government’s loan program for first time home buyers, and exemptions to the foreign buyers’ tax for people with work permits, which Gordon said undermined the policy.
WATCH: B.C. to lift foreign buyers tax for people with work permits
“They sent a message to the market: ‘Hey, we’re not going to let prices fall.'”
“In a housing bubble, like we’re dealing with, where everybody thinks that prices can only go up, well expectations are key. And you really need to change those expectations.”
Prices began to rise again, a fact Gordon attributes to prospective home owners panicking at the prospect of being permanently priced out of the market.
Gordon offers Toronto as a counter example, where a foreign buyers tax was introduced – but without any policies that could potentially offset it.
The Toronto market has cooled, he said, to a point where active listings have climbed by 45 per cent in three months.
WATCH: Home sales in GTA drop in May after foreign buyer’s tax introduced
As for whether the B.C.’s new government can finally thread the housing affordability needle, Gordon said he is hopeful.
He said he supports the NDP’s proposed “Housing affordability fund,” a policy rooted in an idea that widely touted by economists last year.
That measure would target foreign investment in a different way, by charging property surtax charged to all home owners, who would then get a refund via the income tax system.
“That’s the most important policy at this point and if they introduce that, that’s fantastic and that will have a big impact and generate affordability.”
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