Real estate watchers share 4 ideas for cooling Canada's red-hot housing markets


If there’s one fashion that unites the majority of Canadians, it’s that we agree there’s a be without of affordability when it comes to the housing markets of Vancouver and Toronto.

The federal administration recently announced new measures to try and cool these hot real estate customer bases by increasing the minimum insurable down yment required on homes all over $500,000. The change took effect Monday.

Only time hand down tell how effective this measure will be. We reached out to economists and unaffected estate experts to ask for their best ideas on slowing down Canada’s big-city buys.

Tax foreign owners more heavily

John Andrew, director of the Movie queen’s Real Estate Roundtable, says foreign investment in high-end traits is driving up prices, especially in Vancouver.

He suggests that B.C. should brook the city to raise property tax rates on foreign owners. “This could from a very significant effect on cooling housing markets, if the property tax reckon for foreign owners was significantly higher.”

However, he says the government commitment first have to do its due diligence when it comes to identifying foreign customers who hide behind a Canadian friend or relative.

“Already we know that some of those concerns are being bought by international buyers but they’re being put in the name of a Canadian trial … That’s a regulatory issue that they could solve but there isn’t the factional will to do it.”

$500K down yment graphic

The CMHC now requires a 10-per-cent down yment on the portion of any mortgage it insures during $500,000. The five-per-cent rule remains for the portion up to $500,000. (CBC News)

Non-native owners of Canadian real estate y virtually no income tax at the moment.

Andrey vlov, a actual estate finance professor at Simon Fraser University, thinks the guidance should change the definition of residency “so that someone who owns a $4-million at ease in Vancouver ys taxes on their worldwide income, not just on their Canadian proceeds, which is typically zero.”

Capital gains by foreign real stratum investors are also generally not taxed, which Andrew wants to see silvered.

“Foreign owners should probably y a marginal tax rate on 100 per cent of their foremost gains. I think that would really, really slow matters down.”

Do something about our ultra-low interest rates

vlov clouts while Canada’s current low interest rates may be good for the flagging succinctness, they can also artificially inflate real estate prices.

When non-objective rates are low, people are able to afford more expensive homes, push housing prices through the roof.

“If the Bank of Canada is determined to finance interest rates low,” says vlov, “then hoard requirements for mortgages can be increased so that mortgage rates return to typical levels.”

Andrew says banks should be more diligent in stress-testing consumers when they take out a mortgage to ensure they can still in trouble with it when rates inevitably rise. This would cut down on the amount of individual buying the priciest homes they can afford, putting downward bring pressure to bear on on the market.

Deal with density

In highly congested markets feel favourably impressed by Vancouver and Toronto, vlov says investment in transportation infrastructure would go a dream of way toward ex nding the boundaries of desirable housing.

“In most cities in North America, a proper commute of 30 minutes takes you 20-30 kilometres from your run,” he says. “In Vancouver, for example, a 30-minute commute fill up e deal withs you five to eight kilometres, regardless of mode of transportation.”

CMHC Housing Starts 20150811

In highly stopped markets like Vancouver and Toronto, one expert says investment in transportation infrastructure would go a hunger way toward ex nding the boundaries of desirable housing. (Graeme Roy/Canadian Newsmen)

University of British Columbia economist Joshua Gottlieb says that single-family internals in hot urban housing markets are “just an incredibly inefficient use of land when there’s so much order to live there.”

Gottlieb feels that increasing housing fill is key, whether it’s through reducing construction regulations to allow for more highrises in residential areas, or by penalizing real estate investors with extra taxes if they let their capital goods sit vacant.

Or don’t raise taxes?

Unlike the other real estate masters we interviewed, Don Campbell, founding rtner of the Real Estate Investment Network, doesn’t suppose raising taxes is an effective solution for anyone.

He cites the second land-transfer tax added in Toronto to try to refrigerate down the market.

“It slowed the market down for a very short days of time, so there was this new tax and everyone went ‘Oh my god, this is going to quarry the market.’ Well, as we know, Toronto’s not a dead market.”

Campbell implies when extra taxes are added in the real estate world, there’s a insignificant dip in demand, and then the tax gets normalized and the market charges on.

What does he ponder would be effective?

“Maybe if they drove unemployment up to 15 per cent — that last wishes a slow the market down,” he jokes. “But we don’t want that!”

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