Quote:
Originally Posted by tonyvan
Most buyer restrictions wouldn't work.
Examples:
Australia has strict restrictions targeting rich foreign buyers but the country still is still one of the most expensive in the world. Vancouver would be considered very affordable in Australia.
China itself has one of the most strict policies in the world to stop speculators. In most big, desirable cities, you have to live and pay taxes to the city for at least 5 years in order to be eligible to buy a property. And in most cities, first property you have to pay at least 40% down payment, with 60% down payment on your second property. Third property is usually completely banned. Mortgage interest rate is also much higher at ~6% and only variable rates are available. Also, when selling your second property, an extra 20% is taxed on the increased value of the property. Even with such strict restrictions, desirable cities like Shanghai and Shenzhen still see double digit price increase every year....
The reason is simple - as long as there are people moving to your city, price will increase unless you build more units to accommodate these people.
The bottom line is supply and demand - in order to slow price increase, there's only one way: build more condos and demolish the single family houses. And this has to be done near the city centre otherwise you would have a low density core with sky-high prices surrounded by affordable high-rise condos in the near suburbs (which is sort of happening already).
Also the same economics happens in localized parts of the city. If you stop densifying downtown, it will get more expensive as the supply has stopped growing and more people moving to the city want to live there. This will gradually push lower income people to undesirable areas of the city. So densification is the ONLY solution. Forget about taxation, restrictions and manipulation. They won't work....
And if policy makers reject densification, San Francisco is the future - extremely high price within the city simply because vew few new housing stocks are added to the city. The whole city gradually became Vancouver's west side - a resort for the super rich.
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Then the solution is to destroy demand.
Not as awful as it sounds, as the outrageous price increases are being driven by one demographic. The only effect low interest rates have is allowing some local wage earners to even stay in the game.
So how to destroy demand without harming the larger economy? Simple:
1) Stop accepting international students into elementary and secondary schools.
2) Restrict international students at publicly funded universities and ensure available spots area allocated to a wide basket of countries.
3) Implement US style declaration of global income and taxes.
4) Require three years of Canadian tax returns before one can purchase property.
5) Forbid the use of numbered companies or trusts to purchase residential real estate.
6) Forbid the construction of monster houses on residential lots.