OTTAWA (Reuters) - Canadian Prime Minister Stephen Harper pledged on Wednesday if reelected to limit foreign purchases of Canadian real estate if it turns out that such purchases are pricing Canadians out of the housing market.
“There are real concerns that foreign, nonresident real estate speculation is the reason some Canadian families find house prices beyond their budgets,” Harper said in Vancouver, where the housing market is especially hot.
The Greater Vancouver market has seen an influx of money from China and Hong Kong, and the average price of a detached home in the area in July was C$1.4 million ($1.1 million).
Harper said that by some estimates, 15 percent of Vancouver’s condos sit empty.
“No dreams are living there. If such foreign, nonresident buyers are artificially driving up the cost of real estate and Canadian families are shut out of the market, that is a matter we can and should do something about,” he said.
For starters, he said that if his Conservatives win reelection on Oct. 19, the government will start collecting comprehensive data on the purchase of Canadian real estate by nonresident foreigners.
If necessary, he said the government would, in coordination with Canada’s provinces, “take action to ensure that any foreign, nonresident investment supports the availability and affordability of homes for Canadians”.
A Conservative statement pointed to Australian measures as a possible model: regulations limiting foreigners’ ability to purchase existing homes for investment purposes but allowing foreign investment that leads to the construction of new homes.
“At the center of the Australian model is the principle that foreign investment in residential real estate should increase Australia’s housing stock. This same principle is at the heart of our commitment,” it said.
The statement also noted that Britain and New Zealand were limiting foreign speculation in real estate through tax tools, in Britain’s case deployed at the national and municipal level.
In another step to deal with affordability, Harper promised to increase the amount that first-time home buyers can withdraw tax-free from their registered retirement savings plans to C$35,000 from C$25,000.
“Home ownership is good for Canadian families, it’s good for Canadian communities and it is good for the Canadian economy,” Harper said.
Additional reporting by Leah Schnurr; Editing by Peter Galloway and Andrew Hay