The end doesn’t appear to be nigh for price growth in Vancouver’s real estate sector, driving would-be buyers to their wits’ end in figuring out how to pay for living space in Canada’s most expensive housing market. And while potential solutions have been advocated left and right by various pundits, a long-time observer proposed that authorities should intervene in the issue decisively.
The crucial ingredient in any step to be taken by federal and provincial officials is better information, according to licensed realtor Romana King.
“The more informed you are, the better chance you have of making a good decision. The same applies when creating rules and regulations. If governments and provincial associations want effective regulations then they need information and accurate data. The more information they have and the better the data, the better prepared they are to create a long-lasting solution, not a temporary fix,” King said in her April 29 analysis for MoneySense.
More specific and accurate data would allow authorities to “establish stiffer penalties for real estate agents who breach the laws that regulate the industry,” King stated.
“[Through] an independent examination by an independent advisory group, the weaknesses within the current regime—such as insufficient fines for misconduct—will be revealed and, eventually, solved,” the analyst said.
Zeroing in on the influx of overseas capital might yield tangible results, although King maintained that this would be a divisive choice in a country that warmly welcomes immigrants.
“Another controversial option is to consider implementing a tax specifically for foreign owners or non-residents who purchase property. This is what other countries have done,” she wrote, pointing at similar measures already implemented in Hong Kong, Singapore, and Australia.
King also suggested a thorough review of the property transfer tax, which as of press time does not cover most first-time buyers. This tax currently sits at 1 per cent on the first $200,000, “2% charged on any portion up to $2 million, and 3% on the remainder.”
“Closing this loophole needs to be a top priority for the provincial government,” King said. “While any property owned anywhere in the world should exempt a person from obtaining first-time buyer status in Canada, there is no follow-up. This allows the vast majority of non-resident property buyers to skip out on paying Canadian taxes.”
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate