Saturday, January 30, 2016

B.C. government planning study on impact of foreign home ownership

B.C. government planning study on impact of foreign home ownership

B.C. Housing seeking consultant to research property prices, despite previous claims that investors abroad have little to do with affordability crisis

B.C. government planning study on impact of foreign home ownership

This house in the Point Grey neighbourhood of Vancouver was recently listed for sale for $2.398 million.

Photograph by: DARRYL DYCK , THE CANADIAN PRESS

The provincial government will pay for an external study on the impacts of foreign investment and ownership in B.C.’s property market, The Province has learned.
A July 2015 confidential “issues note” addressed to Housing Minister Rich Coleman says that B.C. Housing has been tasked with researching foreign investment impacts.
And a January 2016 email written by B.C. Housing’s manager of research, Deborah Kraus, confirms the external study and outlines parameters.
In an email titled “Foreign Investment Research Initiative,” Kraus writes that, “B.C. Housing has issued a request for proposals for a consultant to conduct research on this topic and expects to engage a consultant by the end of January 2016.”
The email says the research will take about six months to complete and the consultant will look at: key factors affecting prices for new and resale homes in B.C.; impact of foreign home ownership on home prices, with a particular focus on the Lower Mainland; what sources of data are needed to measure the extent of foreign home ownership and price impacts; to what extent other jurisdictions are experiencing impacts from foreign home ownership, and what measures they are taking.
“It is premature to say if the research will be made public,” Kraus states in an email obtained by The Province.
B.C. Housing officials did not answer a detailed list of questions from The Province on the planned study, such as how much it would cost, what methodology would be used, how the contractor will be chosen, and whether the call for proposals is publicly accessible or not.
By undertaking a study that has not been publicly disclosed, Victoria appears to be deviating from its public stance on offshore investment.
In June 2015, Premier Christy Clark responded to calls from Vancouver Mayor Gregor Robertson to clamp down on property speculation by suggesting foreign cash has little impact on B.C. home prices.
“First, industry experts estimate that most of the real estate speculation taking place in the region is being done by local investors,” Clark responded in a letter to Robertson.
Supporting her position, Clark attached an analysis completed by the B.C. Real Estate Association and the Ministry of Finance.
“There is a perception that foreign investors and speculators are driving an affordability crisis in residential real estate — particularly in Greater Vancouver,” the Finance Ministry report said. “The data we have does not support this perception.”
The report said “industry experts” estimate foreign buyers make up less than five per cent of home sales activity in Greater Vancouver.
A confidential July 13, 2015 “Analysis of Housing Market Affordability” note prepared for Housing Minister Rich Coleman suggests responses were prepared to answer requests for action on foreign investment.
Recommended responses for the issue, however, are redacted in the document obtained by The Province.
However, Coleman was quoted in a July 16, 2015 report saying that Victoria already had the information it needs on foreign ownership of B.C. homes.
“We’ve worked with the real estate guys for years and have got data on sales,” Coleman was quoted in The Tyee. According to the report, Coleman was pressed on why Victoria would not share the data publicly.
He reportedly answered that sharing data could endanger foreign investment in B.C. and “throws an ethnic group out there and says they’re the problem.”
B.C. Housing officials did not respond to interview requests by The Province.
B.C. Housing’s plans to engage an external consultant follow yet another public plea from Mayor Robertson in early January.
Robertson called for better provincial and federal data on home ownership and acknowledged — apparently for the first time — concerns about foreign investment, citing “stark and alarming” proof that Lower Mainland housing is “divorced from local incomes.”
Metro Vancouver home sales set an all-time record in 2015, the region’s real estate board said in early January, with the benchmark price for detached properties surging 24.3 per cent year-over-year in December to $1.248 million.
The average detached home in the City of Vancouver costs $2.5 million.
Premier Clark has hinted measures to tackle housing affordability will be announced in February’s budget, but says her government does not want to do anything that would cause existing homeowners to lose equity with falling property prices.