The city of Vancouver is considering restricting ownership of housing to local residents, among other strategies, as it looks to cool a hot real estate market that it says is fueled by foreign and local speculation.
A foreign buyer ban is just one of numerous supply and demand measures outlined in Vancouver’s new 10-year housing strategy, which was announced late last week and presented to city council on Tuesday. Council will vote on it on Wednesday.
Even if passed, as expected, many of the measures being considered will need the support of federal and provincial governments, particularly those around taxation.
“There is a perfect storm in Vancouver,” Gil Kelley, Vancouver’s General Manager of Planning, told council on Tuesday, pointing to the “excessive supply of global capital” flowing into the city, along with builders targeting investors, low-interest rates, and favorable tax policies.
Vancouver, long Canada’s most expensive housing market, has already made numerous moves to try to curb the crisis, including imposing an empty home tax and restricting short-term rentals.
Home prices on Vancouver’s upscale Westside jumped 57 percent in the last three years, sending the typical price — including condos, townhouses, and detached homes — to $1.4 million (US$1.1 million), according to the local real estate board.
In the Greater Vancouver region, the typical home now costs $1 million, 12.5 times the region’s median household income of $79,930, putting home ownership out of reach of many residents.
Rents have also jumped in recent years, with the vacancy rate hovering below 1 percent, the city said.
The lack of affordable housing is putting strain on local businesses, with restaurants, retailers, and even the city itself struggling to find enough workers.
To address the crunch, Vancouver is considering new strategies including imposing a speculation tax, an increase to the luxury tax, and the possibility of “restricting property ownership by non-permanent residents.”
It is also planning to rezone neighborhoods across the city to allow for denser housing, including more townhomes and low-rise condos, in areas traditionally dominated by detached homes.
It is the latest jurisdiction to consider restricting foreign investment in housing, following in the footsteps of Australia and New Zealand.
British Columbia last year imposed a 15-percent tax on foreign buyers in the Vancouver area, which has helped cool the market for expensive detached homes, though demand for condos has exploded.