It is a humorous situation that the government is going all out to stop foreign investors from further driving home prices in the Canadian real estate market. Nevertheless, very little is done to address market speculators who entreat panic in the market, which drives buyers to make higher demands for homes for fear that home prices will further rise. This in turn, results to sellers increasing their asking prices.
Market speculators have also triggered a huge growth in bidding wars across leading housing markets, which in a way affects home prices as buyers are willing to make outrageous prices.
Although a lot of Canadians are pondering why they are finding it difficult to buy a home, the answer is quite simple. Real estate speculators are a driving force deterring prospective buyers as they purchase homes and make expensive re-sales.
In the recent past, many Canadians had the view that market speculators are foreign individuals but there have been increasing evidences which specifies that speculators are mainly Canadians.
Although housing constructors argue that supply is the main issue that affects home prices as buyers have very little options to choose from, reports shows that in Metro Vancouver last year, housing units were built for an estimated number of people who are expected to move to the city. This meant that the city region is probably building more units than required.
Even with this increase in new listings, home prices continue to ascend and according to reports from the RBC Royal Bank, home prices are most likely compelled by buyers who are with the perception that there will be further price augmentation.
Last year, the British Columbia government introduced a 15% tax on foreign buyers which led to a reduction in foreign investor’s activity in the housing market but this decline is not reflected in the housing market as home prices remain the same.
NDP housing critic David Eby noted that Canadians are also not helping the situation as they are crafting a platform for market speculators to increase. Low interests of banks is one way that speculators gain from the situation as they get to receive large loans to enter the housing market, which in turn adds to home prices.
Nevertheless, the federal government is making moves to put a stop to market speculators with several strict mortgage regulations that make it difficult for people to get loans.
J C Loum