New homes are built in a housing construction development in the west end of Ottawa on Thursday, May 6, 2021. NDP Leader Jagmeet Singh is pledging a hefty foreign home buyers’ tax and “massive” investment in housing to chill a white-hot real estate market.THE CANADIAN PRESS/Sean Kilpatrick

New homes are built in a housing construction development in the west end of Ottawa on Thursday, May 6, 2021. NDP Leader Jagmeet Singh is pledging a hefty foreign home buyers’ tax and “massive” investment in housing to chill a white-hot real estate market.THE CANADIAN PRESS/Sean Kilpatrick

NDP promises foreign buyers’ tax, half a million new homes to cool housing market

Market watchers say a countrywide tax on non-resident homebuyers amounts to a ham-fisted approach

NDP Leader Jagmeet Singh is pledging a hefty foreign home buyers’ tax and “massive” investment in housing to chill a boiling-hot real estate market.

Unveiled today at a virtual news conference, Singh’s election campaign-style promise would impose a 20 per cent levy on purchases by non-residents and pour $14 billion into housing construction, with the end goal of 500,000 new units over four years along with widespread job creation.

The main goal is to boost supply anddrive down increasingly unaffordable rental and home prices that have rippled beyond Toronto and Vancouver into outlying towns and cities from Nova Scotia to British Columbia’s Fraser Valley.

“Let’s massively invest in housing as a way to create jobs locally in communities and as a way to ensure people have a place to call home,” Singh said, accusing the Liberals of ignoring a long-standing crisis.

“We know that people are treating Canada like a stock market when it comes to housing and just plopping their money into the housing market, hoping it will continue to grow.”

The dual pledges to tax and invest seekto outshine last month’s federal budget by the Liberals, who plan to spend $2.4 billion over five years on affordable housing and follow through on a promiseto tax non-residents who own vacant homes in Canada at one per cent of the assessed value.

The announcement could hold particular appeal for young voters — a key demographic in any NDP campaign — who feel priced out of the market.

In B.C., a 15 per cent foreign buyers’ tax imposed in Metro Vancouver in 2016 — since raised to 20 per cent and expanded to other communities — had a short-term cooling effect, but prices have been on a stratospheric rise since 2019, spiking in recent months.

“It did not have a very big impact on the market,” said Don Kottick, CEO of Sotheby’s International Realty Canada.

“Governments really have to address the supply side. Residential construction really hasn’t kept pace with the population for decades now.”

Market watchers also say a countrywide tax on non-resident homebuyers amounts to a ham-fisted approach to real estate, which comes down to local conditions, and could have unintended consequences in internationaltourist spots such as Banff and Mont-Tremblant.

Heftier personal savings, house-obsessed millennials and historically low interest rates during the COVID-19 pandemic have conspired to send residential prices soaring amid a dire shortage of units.

READ MORE: Forecast calls for B.C. home sales to ‘explode,’ then drop off

The average home-sale price in Canada rose 32 per cent year over year in March to a record $717,000, with sales activity up by more than three-quarters, according to the Canadian Real Estate Association.

An analysis this week by TD Economics suggested the Liberals’ one per cent foreign owners’ tax is “unlikely to significantly dent current activity” in the market because foreign demand has already cooled in B.C. and Ontario. What is driving the current frenzy in sales and prices is driven to a large extent by domestic buyers, the analysis said.

Singh sought to address another market pressure point, calling for a crackdown on money laundering in real estate. Black-market profits funnelled through land purchases have been “directly attributed to driving up the cost of housing,” he noted.

The Liberal government set its sights on money laundering and market transparency last month.

In a little-noticed line item, the budget allotted $2.1 million over two years for the Industry Department to implement a beneficial ownership registry by 2025.

With some of the weakest money-laundering laws among liberal democracies, Canada currently offers anonymity to investors and money launderers by allowing the real, or “beneficial,” owner to go undisclosed, similar to the Seychelles or British Virgin Islands.

This week, the Liberals moved ahead with another measure, one first unveiled years ago, to ease mortgage costs for more first-time homebuyers by having the government take an equity stake in homes in some of the country’s hottest markets.

The original program saw federal funds pick up five per cent of a mortgage on existing homes for households that earn under $120,000 a year, on a mortgage of no more than $480,000.

The value increased up to 10 per cent for new homes to spur construction and expand supply that the federal government has long seen as a way to cool rising prices.

But starting this week, the program expanded for applicants in Toronto, Vancouver and Victoria, setting the income cutoff at $150,000 and the mortgage limit of $675,000.

The Canada Mortgage and Housing Corporation estimates that should allow first-time buyers in large urban centres to afford homes of up to $722,000, up from the $505,000 in other areas of the country.

There isn’t any interest on the money, but a buyer would have to repay the incentive in full when they sell their house or after 25 years of living in the home.

James Laird, co-founder of the website Ratehub.ca, said a household with $150,000 of income, and with the minimum down payment, can currently qualify for a home valued at $770,000.

He questioned whether the program was worth using.

“Even if a homeowner could qualify for the same amount, owning a home with the government still does not make any sense,” he said in a statement. “The government gets to enjoy the appreciation of the home, while paying none of the expenses.”

Christopher Reynolds and Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

HousingJagmeet Singhndp

Just Posted

Students at Creston Valley Secondary School put together an art installation of a replica residential school room. (Photo by Kelsey Yates)
Creston students create art installation of residential school room

The replica was decorated with a small bed, school uniform, and notes written with pleas for help

A tent housing a mobile vaccination clinic. (Interior Health/Contributed)
Second dose vaccinations accelerating throughout region: Interior Health

To date, more than 675,000 doses have been administered throughout the region

1914
It happened this week in 1914

June 13 - 19: Compiled by Dave Humphrey from the archived newspapers… Continue reading

Prince Charles Secondary School
School District 8 votes in favour of name change for Secondary School in Creston

In an act of reconciliation, a new name will be chosen for Prince Charles Secondary School

Kootenay-Columbia MP Rob Morrison. Photo courtesy Conservative Party of Canada.
MP Morrison appointed to parliamentary national security committee

Kootenay-Columbia parliamentarian one of five candidates appointed to national security committee

People line up to get their COVID-19 vaccine at a vaccination centre, Thursday, June 10, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Vaccines, low COVID case counts increase Father’s Day hope, but risk is still there

Expert says people will have to do their own risk calculus before popping in on Papa

FILE – A science class at L.A. Matheson Secondary in Surrey, B.C. on March 12, 2021. (Lauren Collins/Surrey Now Leader)
Teachers’ union wants more COVID transmission data as B.C. prepares for back-to-school

BCTF says that details will be important as province works on plan for September

Provincial health officer Dr. Bonnie Henry outlines B.C.’s COVID-19 restart plan, May 25, 2021, including larger gatherings and a possible easing of mandatory masks on July 1. (B.C. government photo)
B.C. records 120 new COVID-19 cases, second vaccines accelerating

Lower Pfizer deliveries for early July, Moderna shipments up

A Heffley Creek peacock caught not one - but two - lifts on a logging truck this month. (Photo submitted)
Heffley Creek-area peacock hops logging trucks in search of love

Peacock hitched two lifts in the past month

The Calgary skyline is seen on Friday, Sept. 15, 2017. THE CANADIAN PRESS/Jeff McIntosh
2 deaths from COVID-19 Delta variant in Alberta, 1 patient was fully immunized

Kerry Williamson with Alberta Health Services says the patients likely acquired the virus in the hospital

The first suspension bridge is the tallest in Canada, with a second suspension bridge just below it. The two are connected by a trail that’s just over 1 km. (Claire Palmer photo)
PHOTOS: The highest suspension bridges in Canada just opened in B.C.

The Skybridge in Golden allows visitors to take in views standing at 130 and 80 metres

BC Green Party leader and Cowichan Valley MLA Sonia Furstenau introduced a petition to the provincial legislature on Thursday calling for the end of old-growth logging in the province. (File photo)
BC Green leader Furstenau introduces old-growth logging petition

Party calls for the end of old-growth logging as protests in Fairy Creek continue

B.C. Premier John Horgan leaves his office for a news conference in the legislature rose garden, June 3, 2020. (B.C. government photo)
B.C. premier roasted for office budget, taxing COVID-19 benefits

Youth addiction law that triggered election hasn’t appeared

A vial containing the Moderna COVID-19 vaccine is shown at a vaccination site in Marcq en Baroeul, outside Lille, northern France, Saturday, March 20, 2021. THE CANADIAN PRESS/AP/Michel Spingler
mRNA vaccines ‘preferred’ for all Canadians, including as 2nd dose after AstraZeneca: NACI

New recommendations prioritizes Pfizer, Moderna in almost all cases

Most Read