Most homeowners in British Columbia’s hot housing market live in the province, but one expert says that doesn’t mean foreign money isn’t to blame for high prices and speculation.
Of the 2,156,920 residential properties in B.C, 5.5 per cent were owned by foreign individuals or foreign non-individuals such as non-individual a corporation, trust or state-owned entity, according to the Canadian Housing Statistics Program from Statistics Canada.
Josh Gordon with the Simon Fraser University School of Public Policy says the study only looks at someone’s residency, not where they got the money to buy the property.
“The CHSP data looks at the stock of housing, not necessarily the flow of housing market participation,” Gordon said. “There’s been a misuse of the word domestic (speculation) because the data is about residency. If a resident is using foreign money, then that can’t be chalked up to domestic factors.”
He said even those B.C. residents who are speculating on housing may be relying on foreign participation in the market.
“Are they speculating on the arrival of substantial amounts of foreign money and ownership? If that’s the case, then just because there are a lot of domestic speculations does not change the fact that the overall market is being driven by the impact of outside money.
Gordon says if that’s the case, then foreign money could still be driving the market even though only five per cent of homes are officially owned by foreigners.
“If that’s the case, then just because there are a lot of domestic speculators, does not change the fact that the overall market is being driven by the impact of outside money.”
He points to the slow down in the housing market, particularly in the Vancouver-area as the province introduces policies to curtail the flow of foreign money and as capital controls are controlling the money arriving from China.
“Policy has been on the right track on the provincial level,” he said. “The market has slowed down and prices are starting to fall as we would expect if we thought the major issue was foreign ownership.