moves to tame frothy real estate markets

One year ago, a foreign-buyers tax went into effect in Metro Vancouver. A flurry of housing reform has followed, designed to tame Canada’s frothy markets. Have the moves succeeded? Janet McFarland reports on the aftermath and what’s ahead.

Canada’s housing sector has been whipsawed by policy changes over the past year as governments have tried to cool overheated markets in Vancouver and Toronto and stave off a consumer debt crisis.

In the year since the B.C. government introduced a foreign-buyers tax in the Vancouver housing market, federal and provincial governments have announced a variety of policy changes and proposals that have cumulatively turned residential real estate into one of the most actively regulated sectors in the economy.

The changes have included a combination of vacant homes taxes, breaks for first-time home buyers, tighter mortgage qualification rules and restrictions on foreigners buying homes.

Together the reforms have created a major national experiment in cooling off an industry sector in the face of overwhelming consumer demand. Here are highlights of some of the most significant reforms announced in the past 12 months, along with the market impacts.

Vancouver foreign-buyers tax

The B.C. government surprised Vancouver residents last summer when it announced a new 15-per-cent tax on foreign home buyers effective Aug. 2, making Vancouver the first jurisdiction in Canada to require non-residents to pay a tax on home purchases.

The tax appeared to have an immediate impact, with house sales in the Vancouver region falling 26 per cent in August compared with a year earlier and average prices sliding through the fall.