Experts doubt foreign buyer ban extension will help affordability

Over the weekend, Ottawa quietly extended its foreign homebuyer ban until 2027.

But some experts question whether it will make any difference to affordability in the Lower Mainland.

“The analogy I like to draw is a lemon that has had all the juice squeezed out of it by the foreign buyer taxes here, and by the empty homes and speculation taxes, so no real room for this to have an effect on affordability,” economist Tom Davidoff with the University of British Columbia’s Sauder School of Business said Monday.

In 2021, the year before the foreign buyer ban was announced, roughly 1.1 per cent of sales in B.C. involved a non-Canadian buyer.

"Notably, in 2023, prices basically rose steadily from the start of the year, so as soon as the ban was in effect, we had nothing but rising prices,” said Brendon Ogmundson, chief economist for the BC Real Estate Association. “So, as a sort of salve for affordability, it certainly is not a very effective policy."

And given the other measures in place locally, Premier David Eby offered a muted response to the ban’s extension.

“I don’t expect the extension of the federal foreign buyer ban to have a significant impact on the housing market in British Columbia as a result, but it may have an impact in other provinces where they don’t have these protections,” Eby said Monday.

While B.C. brought in a foreign buyer tax in 2016, the federal government only decided to implement a ban in 2022 – after local measures had already changed buyer behaviour.

“Canada, federally, is a little bit late with this foreign buyer ban, and a two-year extension just seems like a little bit of a fluff – maybe there’s an election coming up or something like that,” remarked David Hutchinson, a Vancouver realtor.

But others feel some restrictions around real estate are appropriate – and needed – even beyond this ban.

“There is going to be a needed national discussion about how you work with people who have second, third and fourth homes, who keep them empty,” said Andy Yan, director of the City Program at Simon Fraser University.

One area of focus for some researchers is what to do with people who clearly have significant wealth, but don’t contribute much tax.

“I think there are sensible demand-side measures,” Davidoff said. “There’s lots of homes that are occupied by Canadians really not connected to the local labour market, so not foreign buyers, but homeowners who are very affluent, but not through the work force.

“A lot of these people who own very fancy homes and are obviously very rich, but pay very little tax in Canada.”

Along with other researchers, Davidoff has calculated if there were a requirement on the owners of the top 10 per cent of homes by value to pay at least one per cent of property value in taxes to Canada and the province, that could generate $2 billion in each of Metro Vancouver and the Greater Toronto Area.