There’s been more and more talk in the media and by real estate experts on the need to implement some rule changes and stringent new measures to the real estate market to slow down the double digit, and record breaking sales and price growth activity we’re seeing. Many believe that the federal government’s budget measures and actions have been symbolic, and that tough changes are being avoided to leave construction and real estate booming to help the overall economy recover.
Rema has some broad suggestions:
“Only by grossly increasing supply in the Canadian housing market to reach the majority of homebuyers, making all purchases conditional on financing to reduce financial overextension of buyers, and implementing regulations concerning listing price thresholds, will we find the answer to cooling the exuberance enveloping Canadian real estate.”
National Bank CEO Louis Vachon thinks a solution could be banning ‘blind bidding’:
“Regulators may need to implement additional tweaks to Canada’s mortgage underwriting criteria and consider new measures. That might include banning blind bidding — the practice of bidding on a property without knowing the value of competing offers — to slow the speed of the home price growth.”
Others have called for a capital gains tax on the sale of primary homes, a political, economic, and socio-cultural sacred cow in Canada. It should be noted that the current Governor of the BOC, Tiff Maklem, when he was number 2 at the BOC, warned in 2013 that real estate was eating up too much capital, investment, and labour, and that there was insufficient investment being made in production and long term growth. Even some senior Top 5 Banking figures are calling on aggressive new measures to cool the market – that’s how dynamic things have gotten.