TechnologyAffordable housing: Would copying New Zealand’s foreign buyers ban help?

17:10  20 april  2019
17:10  20 april  2019 Source:   globalnews.ca

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Copy link. Last summer, New Zealand nixed new foreign homeownership. Foreigners who already owned homes could keep them, but moving forward The problems if Canada were to ban foreign buyers . Marc Lee, senior economist with the Canadian Centre for Policy Alternatives (CCPA) in B.C

New Zealand will ban foreign buyers from purchasing existing homes in the country in an effort to cool soaring property prices. Prime minister-elect Jacinda Ardern said the ban only applied to non-residents. The country is facing a housing affordability crisis which has left home ownership out of reach for

Affordable housing: Would copying New Zealand’s foreign buyers ban help?© THE CANADIAN PRESS Jonathan Hayward In 2018, the government of New Zealand banned most foreigners from buying homes as it tries to tackle runaway housing prices.

Last summer, New Zealand nixed new foreign homeownership.

Foreigners who already owned homes could keep them, but moving forward, only residents would be allowed to buy. The decision was pitched as a solution to unaffordable housing, a pain many around the world — including hopeful first-time buyers in Toronto and Vancouver — are all too familiar with.

READ MORE: New Zealand bans foreigners from buying homes

But while banning foreign buyers might be a politically acceptable approach to tackling affordability since they don’t pay taxes or vote, Brian Doucet, a Canada Research Chair in urban change and social inclusion and associate professor at the University of Waterloo’s school of planning, says such a ban in Canada isn’t likely to make buying a home less of a pipe dream for most people.

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New Zealand Prime Minister Jacinda Ardern campaigned on a promise to clamp down on foreign buyers , blaming them for soaring prices that have left Public policy firm Demographia regularly ranks Auckland, New Zealand ' s biggest city, as one of the world' s least affordable places to buy a home.

Prices in New Zealand are beginning to fall. The latest benchmark QV house price index showed that nationwide residential property values fell 1.6 Housing and urban development minister Phil Twyford said the foreign buyers ban was just one facet of the government’ s comprehensive plans to address

The affordability problem

What we need to do, he says, is reckon with our understanding of what exactly we think housing is for.

“On the one hand, it’s a place where people live: it’s home, it’s security. … On the other hand, it is, for many people, a source of wealth, part of an investment portfolio, and the two sit in inherent contradiction with each other,” Doucet explained.

Right now, the Canadian system prioritizes housing as a source of income over housing as a place to call home, which fuels development based on what will make the most money rather than what is in “the collective interest,” Doucet says. Changing that is key to improving affordability, something that he doesn’t think will happen if the strategy is to ban foreign buyers.

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New Zealand has banned most foreigners from buying homes in the country, in an effort to tackle runaway housing prices. New Zealand is grappling with some of the same concerns as Canada, where foreign buyers have been blamed for driving up the cost of housing , particularly in Toronto

While New Zealand ' s just-passed foreign buyer ban is getting a positive reception from some in B.C., an economist in the southern hemisphere is calling it misguided. "Getting rid of the foreigners is not going to make housing more affordable . The way that the legislation has been written… it' s probably

That idea seems backed up by a housing trends report last month from the Canada Mortgage and Housing Corporation (CMHC). The report zeroed in on non-resident ownership and found that only a small chunk of properties are currently owned by non-residents: 3.7 per cent in B.C., 3.7 per cent of in Nova Scotia and 2.1 per cent in Ontario.

“It’s not that high,” says Aled ab Iorwerth, deputy chief economist with CHMC.

“The other caveat I would introduce is because of the various methodologies that Statistics Canada used, this is sort of an upper bound. It’s very difficult to get a larger number than this.”

The problems if Canada were to ban foreign buyers

Marc Lee, senior economist with the Canadian Centre for Policy Alternatives (CCPA) in B.C., says imposing a ban would be complicated. The more the CCPA and other researchers have dug into the data, he says, the more they’ve run into “some speed bumps to reducing the amount of foreign investment.”

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NZ house sales ahead of Government crackdown * Editorial: A ban on foreign house - buyers is not xenophobic * Foreign buyer ban will affect small proportion of property sales. It also plans to build 100,000 affordable properties in a decade, resolve New Zealand ' s zoning and infrastructure woes

READ MORE: Affordable housing — Would copying New Zealand ’ s foreign buyers ban help ? Earlier this month, a report out of McGill But beyond its work in addressing tourism concerns, Airbnb spokesperson Dagg said, “home sharing is helping thousands of families afford to stay in their homes.”

For one, he says, they’ve had to grapple with “satellite families” — cases where the family lives in B.C. but the main breadwinner is still living and working abroad, not declaring income in Canada. While there’s been some success with the province’s foreign buyers tax, Lee says what’s need is a provincewide conversation about foreign ownership, the extent to which people want to allow it and what changes a ban — however muted — might trigger.

And while a blanket foreign buyers ban might seem like just a policy issue, says Mei Lan Fang, a research associate from Simon Fraser University in Burnaby whose focus includes the Vancouver housing crisis, it’s not.

“We’ve got moral issues, financial issues … and also planning issues as well,” she says.

On the moral side, Fang says you would have to consider the history of colonization and lands stolen from Indigenous Peoples whose descendants still live here. From a policy perspective, she says you would have to think about what impact such a ban might have on immigration policies — would they have to be amended? Would we have debates about how long a person would have to live in Canada before being eligible to own?

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The New Zealand government’ s decision to ban foreigners from buying homes in New Zealand is unlikely to make housing more affordable for native citizens, according to the International Monetary Fund (IMF). " Foreign buyers seem to have played a minor role in New Zealand ' s residential real

New Zealand has banned foreigners from buying homes as part of new efforts to curb skyrocketing housing prices. The government argued the ban would lower the cost of homes, but critics said the new policy risked stifling the economy and would not fix the problem. House prices have soared in

READ MORE: What to know about the new CMHC mortgage incentive

From a planning perspective, Fang says you would have to also consider what would happen to the jobs tied into development.

“In Metro Vancouver, the housing market is quite astronomical, but there’s also a lot of jobs, particularly when it comes to construction and interior design, surrounding all the new condos being built," she says.

"If we suddenly stop this type of investment, what does it mean for the people that are currently living in the city who rely on these jobs?”

Other ways to make housing more affordable

It’s worth remembering that a lot of foreign buyers don’t actually live in the homes they own, Fang says.

READ MORE: Number of vacant new homes reaches record high in Edmonton, says ATB Financial

She used to live in a home in Metro Vancouver where the whole first floor sat empty except for one month a year. That one month of the year, the landlord would stay there. The rest of the house, including where Fang lived, was rented out.

“That whole space is empty,” she says. “Someone could be using it, living in it.”

Maybe part of the problem, Fang suggests, is that there just isn’t enough regulation, enough policies that, when enforced, would make sure someone is not buying living space and then leaving it empty 11 months of the year.

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Doucet suggests curbing, limiting and disincentivizing people from buying multiple properties that they’re planning to rent out “to accrue more wealth.” Tax their empty homes and tax homes that aren’t people’s primary residences — regardless of whether the owner is domestic or foreign.

He is unequivocal: building more homes isn’t a solution since they’re just going to be bought by people who want to post them to Airbnb to make money. And when it comes to Vancouver, Lee agrees.

“Having the capital to build the housing is not our problem,” he says.

“The problem is the housing they’re building. A large part of it is not being aimed at the local market. They’re being aimed at the highest bidders, who could be in China or the United States or Toronto.”

Housing should be local, Lee says, “fundamentally owned by the people who live and work in British Columbia.”

That could mean a return to some “non-market forms of housing,” Doucet says, beyond the more traditional subsidization of rent. Some options include community land trusts, where an organization rents out homes under certain conditions, or it could mean co-ops. It could also mean putting restrictions on what developers can do with certain parcels of land, he says.

“Our cities have gotten out of the business of building housing, but there’s nothing prohibiting us from doing that in the future.”

READ MORE: ‘We are entering a housing crisis,' says Montreal as it ramps up fight against Airbnb

Frankly, Lee says, it’s just important that we’re having the conversation at all.

“It's important that we don’t assume that the status quo — where there’s large amounts of external capital flowing into the housing market for investment purposes — is the norm,” he says. Do we restrict development? Do we invest in more public housing?

“That’s the type of conversation we need to be having if we want to have a housing market that our kids can participate in.”

Read more

Frontline housing workers feel squeeze of high rents, evictions.
Scarce and precarious. Toronto’s rental situation constitutes a state of emergency for frontline housing workers. But policy researcher Jeremy Withers says he is more angry than discouraged. A housing policy researcher, who is working on his PhD, Withers said other cities are doing a better job of creating affordable homes using policies like inclusionary zoning and non-profit ownership of buildings that would otherwise be bought up by predatory landlords.

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