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B.C. Premier David Eby in Vancouver on Monday. He said on Wednesday that speculative foreign investment created a housing market of unaffordable homes.ETHAN CAIRNS/The Canadian Press
B.C. Premier David Eby has rebuffed calls by property developers for the federal and provincial governments to loosen restrictions on foreign investment in the housing sector, saying he doesn’t want to return to the old system that allowed rampant and uncontrolled foreign investment in Canadian housing.
The Premier was responding to an open letter from B.C. developers this week that was also sent to Prime Minister Mark Carney and federal Housing Minister Gregor Robertson.
The letter noted that without the loosening of the rules,the construction of new housing will become more difficult at a time when the country is grappling with a housing shortage.
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Developers are struggling with high construction costs, high land prices, municipal fees and erratic U.S. tariff policies and need foreign investments in the early stages of projects. Without this, the pace of construction will increasingly slow, and housing prices will start to rise as a result, the letter notes.
But Mr. Eby noted Wednesday that his province chose to impose a tax rather than institute a complete ban on foreign housing investment, as the federal government did in 2023 for larger metropolitan areas.
“We put an aggressive tax in place and said, ‘Look, if you’re a foreign buyer, you want to buy, you want to benefit from our public services, from our police services, from our schools, from our hospitals. You don’t get to just buy a property here and pay your income tax somewhere else and not support those services,’” he said, speaking at a news conference on a new liquid natural gas facility in northern B.C.
He said the previous lack of curbs on foreign investment resulted in a glut of empty condos and single-family houses owned by offshore buyers. The Premier also argued that speculative foreign investment had created a housing market of unaffordable homes.
Tom Davidoff, a professor in the University of B.C.’s Sauder School of Business, has written an upcoming article on the impact of foreign buyers on housing for the Canadian Tax Journal. He applauded B.C.’s decision to tax, rather than ban, foreign investment. The federal government’s ban is set to expire in 2027.
The paper notes that foreign buyers end up increasing prices in certain sub-markets when they have incentives to buy overseas. But once governments impose transaction fees or empty-housing taxes on those investments, purchases decline, prices come down and locals benefit from seeing more supply.
But Mr. Davidoff said allowing foreign investors back to Canada, especially for presales, is a benefit for the housing industry and for Canadian residents on certain conditions. And it’s probably necessary for the country’s economy.
“As long as they’re occupied, it’s great. If you want a half million units a year” – a doubling of the current rate of construction that the Prime Minister has said is a goal – “you need all the financing you can get.”
Mr. Robertson, the former mayor of Vancouver who saw housing prices skyrocket during his decade in that office in the 2010s, did not respond to a request for an interview.
Mr. Eby acknowledged that foreign capital could help if it is going to the kind of housing the province needs.
“But if the foreign capital is just going to build housing that is going to sit empty in the middle of downtown Vancouver like the current buildings, well, forget about it. That model is dead.”
A group of Vancouver planners and urban experts also sent out an open letter recently to the federal government arguing for a better approach to solving Canada’s housing problems.
That letter, signed by former head Vancouver planner Larry Beasley and UBC professor emeritus Penny Gurstein, as well as prominent architects Graham McGarva and Norman Hotson, called for the federal government to stop trying to tinker with old, failed models and to develop a new approach.
One of their recommendations: “Do not reintroduce foreign capital or investor demand to reflate prices artificially.”
They recommended measures like prioritizing federal funding for co-ops, non-profits and land trusts, and putting money into fixing up and preserving existing affordable housing, among other ideas.
