FACT CHECK: Will a 1% foreign buyers tax help control housing prices?


We will also introduce a modest one per cent annual tax on residential properties owned by people who are not Canadian and do not live in Canada. We have seen from British Columbia’s example that even a modest tax can have a significant impact on speculation — foreign speculation in housing markets. ♪ ♪ [Reporter] Justin Trudeau chose B.C., Canada’s tightest housing market to make his announcement on a new tax aimed at foreign speculators. It’s also the place that road-tested a similar tax starting last year and as luck would have it, gave its first progress report today. [B.C. finance minister] The tax is working as we intended. It is, in fact, targeting speculators. People living outside of British Columbia. And it’s also helping to encourage homes to be used to house people. [Reporter] B.C. says it’s collecting more money from the tax than it expected to. More importantly, B.C. calculates the tax caused a drop in average house prices of more than five and a half per cent. But not everyone is convinced that something similar should happen everywhere in Canada. [Real estate professional] We would want to take a look at how the regions would be affected coast to coast before we could come out
and say one way or the other whether this will create more supply. Not every market is red-hot like Vancouver or Toronto. There aren’t many foreign speculators looking to buy in Moncton or in Saskatoon. So this measure wouldn’t have much impact there. But in markets that are overheated, B.C.’s experience shows that this model can put the brakes on rising house prices and even roll them back. Evan Dyer, CBC News, Ottawa

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