Harper Blames Foreigners For High Real Estate Prices


Prime Minister Stephen Harper announced some new measures this week, that would aim to track foreign home ownership in Canada. “Canadians [are] struggling to find a home,” says Harper, and he points the finger at non-resident foreign buyers. He says that they are the reason that Canadians are finding house prices beyond their budgets. The real-estate issue in Vancouver is a touchy one for some, with many blaming Asian foreigners for the lack of affordable options in home property spaces in the area. Housing costs are so high, that the average cost of a detached house in Vancouver is now around $2 million. The cost of housing is painfully disconnected from the local labour market.


The property spaces being desired by foreigners however, are those that are too costly for many local residents to ever be able to afford. According to one prominent B.C. Real estate company, mainland Chinese buyers in 2014 accounted for 70 percent of the firm's transactions of high-end homes which had a cost of over $3 million. The data shows a decline in correlation with the price of the property space. For homes that cost between $1 million - $3 million, the Chinese buyers only accounted for 21 per cent of the transactions. For the homes under $1 million, it was reduced to 11 percent. Are the foreign buyers entirely to blame for the high costs of housing in Vancouver? Not exactly.

 

 

 

There are some financial experts who would argue that the Canadian real-estate market, not just Vancouver, is grossly overvalued and ready to pop. According to the Organization for Economic Co-Operation and Development (OECD) and Deutsche Bank Global Markets Research, the Canadian real estate bubble is currently one of the most overvalued real estate bubbles in the world. Also, as Canadians continue to lose purchasing power of their currency every year, there's no surprise that the cost of housing will continue to go up so long as the current self-destructive monetary policy is continued. The Economist has also ventured to estimate that Canada's housing prices are overvalued by roughly 35 percent, and this point was reiterated by the Bank of Canada governor himself who also pressed that he thought the market to be at least 30 percent overvalued. Despite the bubble, the real-estate market in Vancouver continues to do well; thanks to foreign buyers.


Even short sellers in the US are betting on real estate values in Canada to crash, the same ones who profited when the U.S. housing market collapsed back in 2008. They think that Canadians hold too much mortgage debt and that Canadian banks will lose money on unpaid loans when those prices fall. Earlier this year it was announced that household debt to disposable income was at 163.3% at the end of the last quarter.

 

Harper says that his government is committed to begin tracking foreign ownership in the residential market. “A re-elected Conservative government will commit to collecting comprehensive data on the foreign non-resident purchase of Canadian real estate,” said Harper. Although he declined to offer any specifics on how he might go about tracking those transactions. One study effort by the Crown Corporation Canada Mortgage and Housing Corp has been tracking the sale of new condos in the Vancouver and Toronto area, and they found that less than 2.5 percent of the market was foreign owned. Most Canadian homeowners with a mortgage currently, will still be paying it off well into their late 50s. Manulife polled over 2,000 Canadian homeowners in all provinces, and they found that Canadians are carrying an average of $190,000 in mortgage debt, with an average of $217,300 in British Columbia.

Lowering interest rates only adds fuel to the bubble, and the Bank of Canada just lowered their rates in July of this year. Lowering the interest expands the credit and will result in more mortgages and more debt for Canadians. Some are estimating that we could see a correction in the Canadian real estate market this year.

 
www.pressfortruth.ca 

 

Follow Dan Dicks:
Facebook
Twitter
Dan Dicks Twitter
Dan Dicks Instagram

Subscribe:
Youtube
Press For Truth TV


If you do not use PayPal or credit cards you can still donate! We accept checks, money orders, cash and equipment. With good old fashion mail you can send Dan stuff to:

Mail to Dan Dicks:
505-8840 210th Street
Langley BC, V1M 2Y2
Canada

pat_banner.png ribbonDonateBitcoin.png paypal_large1.gif


Add Pingback
blog comments powered by Disqus