Oh, I'm very, very sure money laundering is happening in BC.
I'm certain money laundering via real estate is happening all over Canada; Chinese investors are buying abandoned farm land in Northern Ontario for some reason.
I'm not sure the former owners of the houses would agree. They made good money from the houses they sold to Chinese people. Is that necessarily a bad thing?
Yes, it is a bad thing. Many of those condos and homes are now empty, raising housing prices on families and making effective city planning impossible.
I'm not convinced. If Chinese investors buy properties unseen, you could build lots of cheap apartments and sell them for lots of money. Sure it would be wasteful for a while, but in the end a lot of money would have flown to Canada, and presumably at some point the madness would stop.
I'm guessing regulation is the real problem, as it is so often.
Even if foreign investors let houses sit empty, the rising prices should be an incentive to build more houses, leading to more supply of housing eventually.
Speculation is after all a bet on future demand, and useful for anticipating future demand.
Like most econ-101 reasoning, the "eventually" is doing a lot of work here.
From a policy point of view, it's easy to see why the picture is a bit trickier. Allowed to proceed unchecked, the underlying mechanism you describe will displace a pretty large fraction of the current population, especially as the offshore money fundamentally doesn't bring in much local economic activity after the new construction. These are the people you represent as a government, not the putative future immigrants and speculators.
"Surely it would be wasteful for a while" here represents a multigenerational disruption to a large fraction of your voting public, the majority of whom will see little or no benefit from the incoming money, and the overwhelming majority of whom will see negative impacts.
Why would it displace people, if you build cheap houses to sell to Chinese Investors?
That an influx of money doesn't benefit the economy would also be interesting for most Western governments. "Stimulus" by monetary means seems to be a very popular approach currently. (I don't know, but it seems debatable).
I also don't think prices are going up only because of Chinese investor. I also live in a city with the problem of steeply rising prices (Berlin, Germany), but the fact is simply, it is a very popular city with many people wanting to live here.
But we can't have vast sums of capital, of unknown origin, flooding our country and pricing out our own citizens.