Canadian real estate industry skeptical over incoming foreign buyer ban

The federal ban on foreign homebuyers kicks in on New Year’s Day.

While it’s intended as an affordability measure, many in the real estate industry are skeptical about whether this will meaningfully affect the market.

There are multiple reasons why this won’t actually push prices down beyond what we’re already seeing, argue critics.

That includes real estate advisor Glenn Feldstein with Engel & Völkers in Vancouver, who points out that the vast majority of deals involve local buyers.

“Personally, I don’t think it’s going to impact the market that much, at all,” Feldstein told CityNews. “It just doesn’t make up a big chunk of the market.”

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For example in B.C. last year, only 1.1 per cent of deals involved a foreign buyer according to government statistics.

Then there are the significant exemptions within this approach — for example foreign workers and international students.

“I don’t see it being necessary,” Feldstein said. “It seems like it’s a measure to cool the market a little bit, and help, to help improve affordability for Canadians, but I don’t think it’s going to move the needle.”

Feldstein adds his belief that interest rates, which have surged this year, are more likely to push prices down than a policy like this.

When the federal government announced the plan to ban foreign buyers earlier this year, one leading expert told CityNews it missed lessons from other countries which have initiated similar restrictions.

“We got cheesecloth when we needed duct tape,” Simon Fraser University City Program director Andy Yan said at the time. “It’s missing the sizable amount of policies that have been taken up in places like Hong Kong, Singapore, and Australia when it comes to the role of foreign capital in their respective real estate markets.

“This foreign buyer ban doesn’t necessarily learn from what these other jurisdictions have done in terms of dealing with this phenomenon. You have to remember, when we talk about Canada, I think the [British Columbia] government has been much better than the federal government in terms of catching up with what I think is global practice in terms of the effect of foreign capital in residential real estate, that this is where the federal government is trying to catch up.”