“Chinese buyers are driving up the cost of homes in Vancouver!” This may as well have been a political bumper sticker for nearly a decade in this country as politicians at all levels of government looked for someone to blame for the skyrocketing prices in Canadian real estate.
Unsurprisingly, this line of thinking became part of the established wisdom in Canada and ultimately led to a series of policy changes across the country to discourage and/or ban “foreign buyers” (read “Chinese buyers”) from participating in our housing market.
Initially, this took the form of various new taxes applied to foreign buyers to discourage them from investing in Canadian real estate, and then finally the federal government imposed a sweeping ban on foreign ownership of real estate in Canada, set to expire on January 1, 2027.
Once this policy was in place though, home price escalations didn’t seem to slow—and new home construction did. So very quickly, politicians needed another group to point the finger at. This time, “foreign students” (read “Indian students”) in Canada on temporary visas.
And of course, predictably, we’ve now ramped up aggressive new policies to slow the number of foreign student visas being issued annually.
My prediction: home prices and the rate of new home construction will not change at all because of these policies.
So what are we missing? Now that we’ve ostensibly blocked Chinese and Indians from “manipulating” our housing market, how come the average Canadian still can’t afford a house or a condo?
Well, the reality is that these groups were never the problem in our housing market to begin with.
Let’s step back to consider a different perspective.
