In a piece for HuffPost Business Canada, Fortress Real Developments senior vice president of market research and analytics Ben Myers said that any perceived benefits of blocking overseas capital from moving through the country’s real estate sector would get quickly overshadowed by the minuses.
“Before Canadians and our government make a decision to ban, restrict or add taxes to foreign buyers, we need to consider the potential negative side-effects and consequences of such actions: less tourism, less immigration, fewer consumers, less new construction, marred reputation,” Myers wrote.
“This potential solution creates new dilemmas: In a country of immigrants, do we truly have the right to say ‘we were here first?’” he said. “With tourism, immigration and construction being strong contributors to economic growth, do we really want to discourage potential second-home owners and future Canadians from coming here? Is it worth the potential damage to our national reputation as a welcoming nation?”
The Fortress executive advised a more circumspect approach on the industry’s part, especially since factors not related to foreign owners are also responsible for driving up housing costs.
“Hopefully we don't let anger prevent us from examining many of the other forces driving up house prices in Canada, and finding a solution to our mismatch of supply and demand,” Myers said.
While Statistics Canada received a half-million-dollar allocation in the 2016 federal budget, the organization has yet to draft an effective methodology to gather information on the impact of foreigners in Canadian real estate. Meanwhile, a Fortress survey of brokers and agents revealed that around 8 per cent of their buyer clients were immigrants and foreign nationals.
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Citing a recent report, an industry analyst noted that contrary to what the proponents of the move would expect, a wholesale ban on foreigners would not cool down Canada’s most overheated housing markets but rather intensify the long-running trend of price growth.