NDP Real Estate Policies Effects (Lowering Housing Prices VS Raising Taxes)

[misher]

I tend to be pretty inflammatory but I'm going to try to give a good non-bias overview of NDP Real Estate policies and their effects.

As you may all be aware their are two main Real Estate NDP initiatives/goals that they have been telling everyone, one is to decrease housing prices, and the other is to raise real estate taxes to pay for housing initiatives. My personal opinion is that they failed, but I will do my best to avoid this opinion below.

B.C. Green Party leader Andrew Weaver warned just after the budget was released that James [the NDP finance minister] couldn’t have it both ways. She could not on the one hand take measures to cut prices and sales while at the same time predict her government was going to make even more money off the market, Weaver insisted. It turns out Weaver is about to be proven correct.

https://www.vancourier.com/real-esta...ndp-1.23409005


Lower Prices
The NDP's drive to lower prices has had some success. They have slowed down the market. Originally most sales would have multiple offers and real estate on the market would sell fast. Now there are few offers and real estate is taking much longer to sell. Prices haven't gone down a signifigant amount, but the NDP's initiatives have kept average prices from rising. However, I believe the goal was to drop the lower end of the housing market. Unfortunately its been the luxury market thats gone down while the lower end condos has gone up. The benchmark price of a condo was up 17.2 per cent year-over-year, but up just 0.4 per cent from May. Personally I did not predict this...I suspect its because luxury buyers are now shifting to the condo market but who knows. The NDP's policies may have pushed condo purchase prices to rise slower than they would have, but they don't appear to have decreased them. Thus housing appears to be more affordable for those wanting a luxury mansion but less for those wanting a cheap condo.
References below:
https://www.theglobeandmail.com/busi...ices-flatline/
https://globalnews.ca/news/4322301/h...condos-survey/

Foreign Buyers:
Also of mention is the foreign buyers tax. I know that foreigners have been blamed for our high housing prices. After its implementation

The tax had the effect of pushing monthly sales to foreigners from a high of about 10 per cent of all sales to 0.9 per cent.

. It appears to have succeeded in stopping foreign buyers which was its goal. However, its larger goal was to reduce prices. Unfortunately this has not come about in the long-term. What occurred was a short-term drop.

average prices in Vancouver have rebounded to where they were before the tax’s implementation. In between, there was a marked drop, but it appears to have been temporary. In short, Vancouver is largely right back to where it was before the tax.

My personal opinion is that the biggest reason this tax did not work is that what most see as "foreign buyers" are mostly Permanent residents/citizens of Canada so this tax did not affect their purchases which meant it had little impact on the market. This article in MacLeans states its because

Any drop-off in demand from foreign investors, perhaps discouraged by the tax, appears to have been filled by domestic buyers. Vancouver has enjoyed strong growth in population, wages and job creation, all of which support house price growth. Town homes and apartments, which typically sell for less than single-detached homes, are in high demand for first-time buyers and families. This leads to multiple-offer situations and increasing prices. The number of homes under construction in Vancouver is at record levels, but is struggling to keep up to the demand. Vast parcels of l

https://www.macleans.ca/opinion/why-...re-affordable/


Raise Taxes
The NDP raised taxes in an effort to pay for additional housing programs. They based their budget on a real estate industry that continued operating at the same pace as previous with the additional taxes. Unfortunately, it appears their increased taxes have slowed down the industry. However, there are also the new mortgage rules which did have an effect (which they should have factored in into their budget). As the Green leader pointed out, they tried to have it "both ways". Its worrisome as the slowdown on the real estate industry was not planned by the NDP in their budget so not only property transfer taxes, but related industries such as construction will also pay less taxes.


Overall I do applaud the NDP for trying. Personally I expected the market to go down drastically after they instituted these taxes. Instead it appears that sales have slowed down but prices have not been affected much. I know the slowdown is going to hurt our economy and the NDP budget severely as this article warns

https://www.vancourier.com/real-esta...ndp-1.23409005

I know many supported hurting the real estate industry at the expense of the economy in return for lower housing prices, however this hasn't happened.

So now we're left with the question of where will the NDP get the money from and will it reverse course on its real estate policies or keep going and enact more to try to lower prices? If they enact more taxes I believe prices will eventually go down as the real estate market slows down even more, but the Real Estate and associated industries are a big chunk of our economy so this risks a large tax base. I suspect the NDP will be forced to choose one or the other as the Green Leader pointed out they must, lowering prices or gathering taxes.

I've done my best to avoid personal opinions to keep this article as logical as possible and use sources for facts/opinions instead.

[djmk]

I would think the Chinese buyers care more that their currency drop 10% against our dollar than a couple points of tax. Plus, their gov't is having troubles with our neighbour which might be preventing cash to leave China

[misher]

Originally Posted by djmk

I would think the Chinese buyers care more that their currency drop 10% against our dollar than a couple points of tax. Plus, their gov't is having troubles with our neighbour which might be preventing cash to leave China

Well this post is focused on the NDP's policies and their results. Also I don't like to directly correlate foreign to Chinese as our foreign Ownership is quite diverse as you will see on the below. This surprised me too as most of downtown appears to belong to foreigners from the Middle East and UK:

much of North Vancouver is light green for Iran, South Vancouver is red for China, Richmond is split between China and yellow for the Philippines, Surrey goes dark green for India, and so on

But yes, the Chinese, Indian, Middle Eastern, and British (foreign) market has been hit hard by policies and other factors both within and without Canada. With them out of the picture and prices unchanging its strong evidence that reducing foreign buyers doesn't have a large impact on reducing prices. However, its possible that keeping them out may help to reduce price growth?

[djmk]

the point is that the polices that any government creates can be overshadowed by whatever else is happening around the world.

and that map does not show changes overtime or percentages.

[misher]

Originally Posted by djmk

the point is that the polices that any government creates can be overshadowed by whatever else is happening around the world.

and that map does not show changes overtime or percentages.

All true.
I mostly put that map there so people will say "foreign" ownership instead of "Chinese". Saying a single ethnic group is responsible for foreign ownership is quite racist and is not supported by the facts.