VANCOUVER – The president of the Canada Mortgage and Housing Corp. is warning against an “us versus them” mentality in Vancouver, where he says foreign buyers are not the major factor driving unaffordability.
Evan Siddall delivered a pointed speech on Wednesday to the Greater Vancouver Board of Trade, where he said housing should not become a wedge that divides newcomers from long-time residents.
“When a white person buys a house, we don’t notice. When somebody of a different colour does, we do. That’s not good economics,” he said.
Vancouver’s skyrocketing housing prices have increasingly been blamed on foreign capital flowing from China. The British Columbia government introduced a 15-per-cent tax on foreign buyers in July in response to those concerns.
Asked by reporters whether he believed racism was playing a role in the housing debate, Siddall said he wouldn’t use such a “strong term,” but the contrast between “us and them” was a factor.
“We notice things that are different better than we notice things that are similar,” he said.
“It’s a more captivating story than it is that somebody who has the same complexion as me bought a house for $30 million. Why is that not just as newsworthy?”
Siddall said in his speech Vancouver’s market was already starting to slow down before the foreign-buyers tax was introduced. Evidence from Sydney and Hong Kong shows the effect of similar taxes to be short-lived, he said, and in fact the only impact may be psychological, with investors sitting out because they believe the tax will work.
While offshore buyers are one factor contributing to unaffordability, he said, they are not the only factor. The most important factors over the long term are economic: rising disposable incomes, increased inflows of people and lower mortgage rates, he said.
He added that lagging supply is also a major problem. In Vancouver, the mountains and water are a physical constraint, but an “attachment” to low-density single-family housing in many neighbourhoods represents regressive urban planning and makes the problem worse, he said.
Siddall said Vancouver and Canada were attractive to newcomers in part because of their diversity and inclusiveness.
“Thus far, our inclusive Canadian society has shielded us from the divisions that haunt the U.K., after the Brexit vote, the U.S., as we saw in the presidential elections, and indeed much of the Western world.”
He noted that data on foreign investment in local housing markets is notoriously scarce and challenging to obtain. But a report released Wednesday by the CMHC showed foreign ownership of condominiums in some of Canada’s largest cities has slowed down since last year.
Foreign ownership was the highest in Vancouver and Toronto at 2.2 per cent and 2.3 per cent, respectively. However, that was down from 3.5 per cent in Vancouver and 3.3 per cent in Toronto in 2015, according to the report.
The report said the relatively higher shares in Vancouver and Toronto in 2015 were due to an unusually high proportion of foreign ownership in newly constructed condominiums.
Foreign ownership of condos in Montreal slipped to 1.1 per cent from 1.3 per cent a year ago.
Siddall noted that the share of foreign ownership is likely higher among single-family homes.
The government agency defined a foreign owner as a person whose primary residence is outside of Canada.