Will Campaign Promises to Curb Foreign Buyers Actually Bring Down Canadian Home Prices?

Ahead of our fall election, all of Canada's political parties are full of ambitious housing policy pitches. Yesterday, after the Liberal Party released their long-awaited housing platform ahead of the September federal election, I appeared on BNN with host Greg Bonnell to discuss what impact the housing policies being presented by all parties could actually have on the GTA's booming market. See the full video here, where we touch on these key points:

• Housing Unaffordability is at a Crisis/Is a Key Issue This Election
  
  
  • People who are making well over the median household income in the GTA are unable to purchase homes due to Canada's high home prices. This is particularly true in cities like Toronto and Vancouver where homes are largely unaffordable unless buyers get financial help from parents or other family members.
  • Some residents are starting look far outside of the GTA, some even leaving the country and moving to the US.
  • Even current home owners are worried about their children and/or grandchildren being unable to buy a home in the future.

• Taxing or Limiting Foreign Buyers 
  
  
  • Adding in a foreign buyers tax could help somewhat, however given the high return on Canadian real estate there is plenty of incentive for foreign buyers to try and work around these types of restrictions.
  • Foreign buyers are not as much of an issue as foreign capital is, as many of the buyers in the Canadian market have some relationship to Canada, but use finances generated elsewhere to purchase property here.
  • Often, these policies have so many exemptions, for example for foreign students, that curb the impact they have on the market.

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• Banning Blind Bidding
  
  
  • While transparency is always a good thing, we'll have to see whether the federal government is actually able to introduce this at the provincial level which has responsibility for real estate industry governance. 
  • However, even countries like Australia where the buying process is more transparent, high home prices and unaffordability are still a problem, similar to what we are experiencing in Toronto and Vancouver.
    
    
• Why Home Prices Drops Aren't Very Attractive
   
  • If improving housing unaffordability comes down to stalling the rapid acceleration in prices that we've been seeing, political parties have to manage to slow the market without crashing it and turning off the many voters who already own homes and do not want to see prices 
    drop.