How about a "Housing Speculation Tax"?
A few weeks ago, my wife and I looked at a condo for sale in Vancouver’s Olympic Village, just in case we ever decide to sell our house in New West and downsize. Although the building was nice and it had a peekaboo view of False Creek, an 1100 ft.² condo with three small bedrooms was listed at $900,000. $900,000 will get you something very nice on the street I grew up on in “North Oak Bay.” Maybe a view of a lake in the Sunny Okanagan. A nice home near a golf course in South Surrey. Or perhaps a palace on the Sunshine Coast or elsewhere in BC.
Recently, the New Yorker argued that Vancouver was now a “hedge city” in a world where real estate was now a global commodity. Vancouver offers comfort, security and protection from the possibility of climate change and political and economic upheaval in a dangerous world. Quoting Bing Thom architect Andy Yan: “If the choice is between losing 10 to 20% in Vancouver versus potentially losing 100% in Beijing or Tehran, then people are still going to be buying in Vancouver.”
Unfortunately, a city that appeals to foreign oligarchs and the uber-rich creates its own issues for the rest of us. Last year, my assistant quit and said: “My husband and I are moving to Edmonton.” Even though they lived in a condo in the suburbs and the commute was only 30 minutes on the Skytrain, they wanted a house with a yard. Yaletown, Kits and other parts of Vancouver may be funky, but this couple couldn’t afford any kind of house with a yard without living far away in Mission, Maple Ridge or another community where the commute could be an hour and a half each way.
This raises three important issues. First, how are my two university age children going to be able to afford to live in the neighbourhood they grew up in, even if they become lawyers?
Second, who’s going to be able to afford to buy my house when it comes time to downsize and retire? Who are the future buyers of the million-dollar houses? And third, what happens when our young lawyers and support staff tell you they’re sick of living in a 650 square-foot condo, so they’re quitting to take up another job in Edmonton?
The media is filled with surveys about how wonderful Vancouver is and that virtually every year Vancouver ranks on par with, (or slightly behind) Zürich, Geneva, Melbourne and Auckland as the most wonderful places in the world to live. In fact, the Mercer Quality of Living Survey for 2014, released on February 19, had Vancouver pegged as the city with the highest quality of living in North America and the fifth highest quality of living in the world, (despite the bloody bike lanes).
But did you know that Singapore imposed a 10% tax on residential property purchases by non-permanent residents (foreigners) in 2011, which was raised to 15% in January 2013 to fight “excessive speculation in the property market?” Hong Kong imposed a 15% tax on home purchases by foreigners in 2012 “under growing pressure from residents who can’t afford home purchases.” And to stabilize the market and cool down speculation, Hong Kong also raised taxes by up to 20% on land sold within three years of its purchase, whether foreign owned or not.
Perhaps it’s time to think more long term in Canada’s hottest real estate market. If offshore speculation is driving up real estate values in Vancouver to the point where our legal assistants and young lawyers are moving “far away” to live and work and our children can’t afford to live in the neighbourhoods they grew up in, perhaps it’s time to seriously consider a Housing Speculation Tax, just like Hong Kong and Singapore did. (Maybe the revenue could be earmarked for education).
Just don’t use the initials HST when it’s brought in.
The views expressed herein are strictly those of Tony Wilson and do not reflect the opinions of the Law Society of British Columbia, CBABC, or their respective members.