Ahead of prohibition, there was a run on stockpiling alcohol. When governments propose gun control laws, gun sales surge. Putting a lot of effort towards restricting something often draws more attention to it. It's called the Streisand Effect, and it happened with the Government of Canada's Prohibition on the Purchase of Residential Property by Non-Canadians Act, also known as the foreign buyers ban.
According to a report published by Vancouver-based real estate services firm Rennie on Wednesday, the share of foreign home buyers tripled in the second half of the 2022, in the direct lead-up to the foreign buyers ban coming into effect.
Rennie, using data sourced from the Province of British Columbia's property transfer tax database, found that the proportion of residential transactions in Metro Vancouver that involved foreign buyers was at just 0.9% around the time when the ban legislation received Royal Assent, on June 23, 2022. It then proceeded to spike to 2.8% -- tripling -- before the ban came into effect on January 1, 2023.
The share of residential transactions in Metro Vancouver with foreign involvement. (Rennie)
Rennie notes that the data includes "buyers subject to BC's foreign buyer tax, and may include some buyers exempted from the ban, such as international students," but that there was "a window of opportunity" before the door was closed and the increase is clearly evident. (What's the aphorism? When a window opens, a door closes?)
Rennie collected data that extends back past 2018, when the share of foreign buyers peaked at about 5.2% in mid-2017. There was then a sharp drop-off to 1.6% in 2018, directly coinciding with the provincial government increasing the foreign buyer tax from 15% to 20% and widening it to include parts of Vancouver Island and the Fraser Valley.
The share of foreign buyers was then volatile for about two years, until it began to plateau around the onset of the COVID-19 pandemic, hovering at around just 1% from 2020 to 2022, before the ban legislation received Royal Assent -- evidence that foreign buyers have not really been a serious issue, at least here in BC, and that the ban was a delayed response to an old problem at best and a nothingburger at worst, as many critics have said.
Foreign Buyers Ban: A Complete Timeline
April 2022: Federal Budget 2022 Reported to Include Ban
April 2022 - December 2022: The Industry Reacts
- Ban on Foreign Homebuyers Isn’t the Solution, Say Industry Experts
- The Real Problem is Domestic: Why the Foreign Buyer Ban Just Won't Work
- With the Housing Market in Decline, Will Canada Come to Regret Banning Foreign Buyers?
- To Ban or Not to Ban? Critics Call Canada’s Foreign Buyers Ban 'Political Theatre'
