IMF Sounds Alarm Bells Over Canadian Real Estate Trends
The International Monetary Fund, a multinational organization that concerns itself with both global and national financial matters in a variety of forms, has signalled to the Canadian government that there is a clear problem with the country’s property market trends. In particular, the IMF is concerned with the possibility of a potential overcorrection in regards to home prices, which may result in massive economic consequences if the problem is not corrected.
The IMF has suggested that a number of political and financial reforms take place in order to prevent home prices from spiralling out of control, as well as market forces from too strongly reacting with a potential upset in current property trends. In particular, the organization has recommended that the Canadian government adopt a stricter approach that would see the curbing of the amount of influence that speculators have on property market prices and trends, a more tight-knit effort to cooperate between various provincial and federal governmental regulative agencies, and most importantly, a more detailed and reliable database that provides information in regards to real estate transactions across the country. Indeed, both university scholars as well as government regulators have often decried the lack of available data when it comes to real estate deals, so much to the point that universities are often having to create their own datasets in when trying to conduct their own investigations within the real estate market. An example of this has been a Simon Frasier University study that suggested the disproportionate influence that foreign buyers have had within Vancouver’s property market.
Perhaps most interestingly, the IMF has voiced
concern over the adoption of a foreign buyers tax, various schemes of which
were first implemented by the provincial government of British Columbia in
August of last year. This was a response to massively inflated home prices,
which it blamed on foreign investment and speculation, as well as the provincial
government of Ontario, which has taken a similar measure and has cited similar
justifications for doing so. The IMF has claimed that such foreign buyer taxes
are actually a form of discrimination, specifically because they target foreign
buyers. Indeed, there has been a lawsuit filed by a Chinese national against
the British Columbian government under the claim that the tax is a violation of
Canadian rights guaranteed by the country’s Charter of Rights and Freedoms. The
IMF suggested that other measures should also be taken into account when it
comes to controlling local home prices, instead of allegedly unfairly
penalizing international buyers.
Published Date: Jun 20 2017