The average price of a detached house in Metro Vancouver was well over $1 million in April, up 12.5 per cent from one year earlier. Prices in other cities, like Toronto, aren’t far behind.
Such fast-growing prices have squeezed out many young buyers and some blame wealthy foreign investors, who they say are snapping up the limited supply of houses and condos.
UBC professor Paul Kershaw says that the unaffordability is clear. His recent study suggests it now takes an average 25- to 34-year-old Canadian making median full-time earnings 10 years to save an average down payment. In the 1970s, it was about five years.
In Vancouver, Kershaw estimates it takes more like 20 years. “Even the most elite, earning six-figure salaries, will be struggling to get a space in metro Vancouver,” he says.
An online petition demanding foreign investors be restricted from buying housing in Vancouver recently passed 20,000 signatures, forcing politicians to respond.
The petition points out that other places with soaring home prices have put restrictions on foreigners to keep them out of the resale market.
Australia, for example, requires non-residents to get approval before buying a residence and usually only approves those buying in new developments.
“The Australian Government believes that foreign investment in the housing sector should increase the supply of homes, and should not be speculative in nature,” says a guide from its federal government.
On Thursday, both British Columbia’s premier and Prime Minister Stephen Harper rejected the idea of such restrictions.
Harper said limiting foreign investment in housing is not something he is “contemplating at the current time.”
B.C. Premier Christy Clark, meanwhile, acknowledged that restricting foreign investors would cause prices to drop, but she won't consider restrictions.
“In terms of a tax on foreign buyers, people who already own homes are often a little bit concerned about that idea because it would probably mean a big reduction in the equity they own in the home,” Clark said earlier this week.
“By trying to move foreign buyers out of the market, housing prices overall will drop -- that’s good for first-time homebuyers, but not for anybody who’s depending on the equity in their home to maybe get a loan, or use that to finance some other project.”
That may be bad news for Vancouverites like Mike Manson and his family. Their rental home was recently sold to developers and they say they will never be able to buy in Vancouver.
“We are being forced out of this city,” he says.
With a report from CTV Vancouver Bureau Chief Melanie Nagy
