[rubayeet]

Foreign ownership of houses comprises only small % of the housing market [1]. The measures promised (but all political parties, not just Trudeau) have been applied in New Zealand and their housing market still remain white hot. The root cause is low supply of houses in Canada, the red tape around land / property development keeps construction of housing slow and costly.

[1] https://www150.statcan.gc.ca/n1/pub/11-626-x/11-626-x2017078...

[jseliger]

The housing discourse has long since reached the point of satire: Canada will try absolutely anything to lower the price of housing except build more housing: https://www.mcsweeneys.net/articles/i-will-do-anything-to-en....

Meanwhile, https://www.worksinprogress.co/issue/the-housing-theory-of-e...

[funksta]

> Canada will try absolutely anything to lower the price of housing

This is absolutely not true. Canadian policymakers are willing to do almost nothing that could reduce housing prices– instead they try to induce prospective buyers to take on even more debt under the guise of "making housing affordable". Just look at every major party's housing platform in the current election– besides some very hand-wavy notions of bringing on more supply, and the LPC's plan to eliminate blind bidding, the "solutions" are almost universally focused on further stoking demand

[abandonliberty]

A drop of property values would hurt a lot of voters and wealthy influential investors / campaign donors.

Same thing for appropriately taxing seniors living in now multi-million dollar hovels.

[klyrs]

It's even worse than that. Developers are building huge skyscrapers full of housing. Problem is, it's all luxury housing, well above average prices for comparable square footage. Then, people who don't want that luxury will end up stretching their budgets to buy it due to a lack of options in their price range. Developers have huge influence on local politics, so I don't really see a way to escape this.

[gruez]

> Problem is, it's all luxury housing, well above average prices for comparable square footage

but that's fine right? The people rich people moving into the "luxury" apartments will free up the "nice" apartments for middle class people to move into, who will subsequently free up the "okay" apartments. Building $30k cars also doesn't help the college student/single parent who has a budget of <$3000, yet we don't try to outlaw those cars or mandate "affordable" cars because "people who don't want that luxury will end up stretching their budgets to buy it due to a lack of options in their price range".

[jseliger]

"Luxury" housing helps low-income renters: https://fullstackeconomics.com/how-luxury-apartment-building..., as one would expect from supply increases.

[sfifs]

> Foreign ownership of houses comprises only small % of the housing mark

So a key part of the picture this kind of argument misses out is that price appreciation is primarily an effect of *marginal* demand and supply, not inventory. To put it another way as long as there's even a little bit of demand exceeding supply, prices will go up till sufficient marginal buyers drop out of the market. A very small imbalance is enough to push prices up. To begin appreciating how and why this happens, you may want to analyze a granular item level time series dataset of a market or auction (I once looked deep into a course auction at my alma matter) - it's quite eye opening.

In this case, there's presumably fairly price in-elastic foreign buyers and/or corporate structures like REITs buying into the residential buying market. Note that at any time, the entire market is never at play as most families wouldn't want to sell and move or change their lives - personal risk plays a factor - if we sell now & prices keep rising, how will we afford a house in the future etc. So prices keep rising.

Note that interestingly housing market is asymmetric in the sense that prices don't fall quite as much when marginal supply out-strips demand. Potential sellers who occupy their own houses generally prefer to stay in their homes and simply go out of the market. That's why prices drop in a big way only during major economic crises when people lose jobs, are unable to fund their mortgage and are forced to sell or let the banks foreclose.

In terms of fixes, creating additional supply by easing restrictions will definitely help. An additional way would be to disallow or disincentivize non-resident ownership. Eg. By banning price inelastic absentee overseas owners and investment companies from residential properties, taxing second and third home purchases by individuals with high duties etc but the key thing is to codify regulation at the "intent" level rather than at execution level so parties exploiting loopholes can be prosecuted and enforcing them.

[koolba]

Percentage of the total market is not the issue. The issue would be percentage of sales. If a large chunk of them are foreign cash offers, this would have a massive impact.

Assuming they don’t work around it through straw purchasers…

[ksaj]

It's a more nuanced problem than that. This is how I've understood the problem when discussing foreign ownership specifically (don't shoot the messenger please!):

Our housing prices are wildly high, partially or even significantly, because of very wealthy foreign purchasers who often don't even live in the homes they buy. They jack the price up and sell them to other very wealthy people from their respective home countries. Rinse and repeat. It affects the prices of homes all around the property in tandem.

Basically those wealthy people who aren't contributing to the economy outside the house they bought, are making housing outrageously expensive for the people who do live here, because regular people can't financially compete with the wealthy purchasers that see the home as nothing more than a money maker to trade in overseas properties stacking.

[indemnity]

Correct. Due to the pandemic and these restrictions, foreign buyer presence in NZ is slim to nil, yet appreciation this year is 30%+. Supply is coming, but slowly due to supply chain constraints and lack of labor due to border restrictions. The relaxed interest rate environment due to pandemic support has no doubt contributed also.

[sien]

Regarding NZ. This tweet graphs NZ prices with the foreign ownership rule change.

https://twitter.com/Birdyword/status/1435984024619601925

[baybal2]

Having few skyhigh priced McMansions on property listing just to fish out these 4% of rich foreign buyers definitely makes most realtors to put extra efforts to cater to them, and hold out on locals.

Having foreign buyers buy very so-so, if not shitty for the price houses with 20% 30% premiums is a story which many realtors in Vancouver can talk about.

Although, I admit, the root cause is still the understudy of housing in big, fast growing cities.