UPFRONT
MARKET UPDATE NEWS BRIEFS Quebec intensifies campaign against fraudsters
The Quebec government is stepping up its campaign against wealthy immigrants who have been using the province’s previous regulatory regime as a ‘trampoline’ into Canada’s vibrant housing market. The phenomenon has led the provincial government to tighten their criteria and review process, refusing entry to applicants showing signs of wanting to reside in another part of the country. “If you have BC property, if you have a child attending a BC school, there is a question mark on your intent to settle in the province of Quebec,” said immigration lawyer Richard Kurland.
Two banks impose stricter mortgage application rules
Two Canadian banks have taken the first step in addressing red-hot housing activity in Vancouver and Toronto by implementing tighter requirements on mortgage applications. The regulatory changes come amid increasing concerns over the alleged effect of nonresident homebuyers on Canadian residential real estate prices, according to The Globe and Mail. Scotiabank recently terminated its pilot program that allowed clients who make large down payments to skip income verification procedures. Meanwhile, BMO is now requiring all mortgage applicants to present documents that validate their level of wealth and their source of income.
Observer warns of contagious fear in Vancouver market
Ever-rising prices in Vancouver, along with BC’s new 15% tax on foreign buyers, have led to widespread apprehension that might threaten the stability of the entire market, one analyst cautioned. “In the property market, where the mood
of individual buyers matters so much, there is no question that fear – and loathing – have an effect,” said market observer Don Pittis. “In highly liquid stock markets, experienced institutional investors act as an anchor on wild market swings. But the housing market is not liquid. And the majority of traders are inexperienced amateurs.”
Economist says Vancouver prices could continue rising until 2041
Amid a greater inbound population and ever-dwindling supply, hopeful homebuyers should not hold their breath for cheaper homes in Vancouver, according to a prominent BC economist. Central 1 Credit Union chief economist Helmut Pastrick noted that the influx of an estimated 1 million immigrants from now up to 2041 will make the ongoing affordability crisis worse, especially for young professionals and new families. “We just have a shortage of land,” Pastrick said at the recent Union of BC Municipalities convention. “As long as we have ongoing growth, we will see increased demand for housing.”
Experts call for federal attention on money laundering
Market observers have posited that illicit financial activity in Canadian real estate is partly to blame for rising housing prices and merits increased federal attention. “I would like to suggest the federal government convene an inquiry into whether or not there is a financial crime problem in the [real estate sector] and what can be done to resolve it,” said money laundering expert Christine Duhaime at a rally in downtown Vancouver on September 17. UBC professor Paul Kershaw agreed, saying that the current situation represents a perfect opportunity for the government to decisively resolve Vancouver’s housing problems.
Housing starts trend way down A recent CMHC report points to a decrease in starts spurred by improved housing supply The Canada Mortgage and Housing Corporation recently announced that housing starts declined significantly in August, a development attributable to the lower number of intentions in specific regions. CMHC’s trend measure of housing starts throughout the country fell from 201,379 units in July to 195,640 in August. “Construction of multi-unit dwellings slowed in most regions, led by lower activity in Alberta and Manitoba,” said CMHC chief economist Bob Dugan in the organization’s report. “However, housing market activity levels remain elevated, and this decline in starts is the market’s response to increasing levels of supply. Multi-unit inventories are above average in several major markets across the country.” The trend is expected to hold until next year, if other forecasts are any indication. National Bank recently projected that Canada will see 176,900 starts in 2017, with Ontario leading the charge at 64,500 (compared to 71,800 predicted for 2016) and British Columbia following with 35,000 (compared to 42,100 predicted for this year). Supply has been cited by several observers as the prime mover of price growth in Canada’s real estate markets, contrary to the popular notion of foreign capital as the chief culprit of over-
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