This past week, the Federal government in Canada took the step of temporarily banning foreign purchase of residential real estate for two years.
It’s no secret that real estate markets in Canada have been hot, much like in many markets in the US.
On Today’s show we’re looking at housing with non-resident ownership, and whether the temporary ban will in fact have the desired impact of lowering home ownership costs for ordinary citizens and residents.
The foreign ownership ban is one of several measures introduced in the budget last week aimed at making housing more affordable.
In my view, this new regulation is a decoy. Inflation is the result of printing money. Rising prices are the symptom of inflation. Just like a fever is a symptom of the flu. You can try to treat the symptoms, or you can attempt to address the root cause.
The root cause of rising prices is lack of supply and strong demand. But the lack of supply is overwhelmingly governed by very slow and bureaucratic approval processes that can in many cases take years to see a project fully approved.
Artificially eliminating demand may have a small temporary impact. But then we will experience a surge in demand once the ban is over.
Government simply will not admit its role in inflation. It’s too convenient to blame others. They’ll blame the grocery store for high food prices, and the gas station for high gasoline prices. They won’t say I’m Sorry Mr and Misses electorate, we screwed up. We printed too much money. It’s easier to blame all those foreign buyers who have no vote for Canada’s domestic problems.
This move is taken straight out of the playbook from George Orwell’s classic novel 1984. When there is a problem domestically, the playbook says you need to take aim at a foreign enemy and that will unit the country against the foreign enemy and deflect attention from the real issue.
Host: Victor Menasce