Vancouver Mayor Gregor Robertson speaks during a Mayors' Council news conference, at Richmond-Brighouse Canada Line Station in Richmond, B.C., on Wednesday February 25, 2015. DARRYL DYCK FOR THE GLOBE AND MAILDARRYL DYCK/The Globe and Mail
Cities are great places to live, but some of Canada's best are becoming an increasingly exclusive club.
Over the past couple of decades, housing prices have outpaced average incomes in much of urban and suburban Canada, leaving thousands of Canadians feeling priced out of this country's major centres.
For example, fixer-uppers in Vancouver's near suburbs will set you back $1-million or more, and forecasts suggest a detached house within the city limits could cost $4.4-million by 2030. It's not much different in Toronto.
So Vancouver Mayor Gregor Robertson, who says he's badgered daily by constituents over skyrocketing housing costs, has come up with an idea that he believes will put a little downward pressure on prices: a special tax on real estate speculators.
Provincial legislators have so far been cool to the idea. But it's difficult to definitively endorse or repudiate the proposal, given what is known about the real estate market. Or rather, what isn't known.
Are prices in Vancouver and other cities being driven ever higher by an influx of overseas, non-resident money? Are investors and property flippers pricing out long-term residents? These are widely held beliefs. But the evidence, both supporting and contrary, is thin – in part because Canada is doing such a poor job of gathering relevant data. It would be easier to have a serious discussion if there were better information. The above questions should be answerable, but the data is thin. Arguments about the housing market turn into speculation about speculation.
It doesn't have to be this way. Individual Canadian banks each know a lot about who's buying what, for how much and under what conditions. So does the Canada Mortgage and Housing Corporation, which in recent years has undertaken new efforts to produce better data on the housing market. Progress is being made, but a lot more is still needed.
Other places have gathered robust data on housing markets, and some have even addressed foreign ownership (Australia and Switzerland come to mind) but it's not clear how much good it has done.
Mr. Robertson's idea probably deserves to be shot down. But given the paucity of relevant housing market information, we can't be sure. The only thing that's certain is that, without a better picture of exactly what is driving Canada's hottest housing markets, any move to lower prices by discouraging "speculation" will be a case of shooting in the dark.