Counting foreigners in the housing market is one thing. Then?

More on the PM’s stated intent to conduct research into the effect of foreign buyers on Canadian real estate prices and information on what the UK and Australia do to restrict foreign ownership:

But if the data does indeed confirm that foreigners are swamping the country’s major urban centres, the question about what Harper would do about it remains up in the air. Harper didn’t elaborate on what specific regulations, if any, he would implement to tame offshore buyers.  However a Conservative Party background document on the issue points to countries like the U.K. and Australia, which have adopted certain policies, without saying which ones are being considered here.

So what have other countries been doing? Earlier this year, Britain implemented a capital gains tax for non-residents selling property in the country, however it was a tax that already applied to British sellers. As of April foreign buyers must pay up to 28 per cent of the profits they earn when selling their homes, though it’s not yet clear whether the move has dampened enthusiasm for London properties among rich foreigners.

And what about down under? “Australia provides a fine example and some guidance,” says Wozny. “[Their regulations] are all fair and logical.” To combat rising house prices in Australia, often attributed to rich Chinese investors driving up the market, rules were put in place restricting foreigners from buying homes that were previously owned or occupied for longer than a year if they plan to use them as a rental property or vacation home. The move effectively limits foreign buyers to newly built properties. As for foreigners living in Australia temporarily—such as those buying a home for their child entering Australia for university—they are restricted to purchasing one property in the country as a primary residence, and must sell it when they leave.

Australia has other nuanced regulations for how quickly foreigners must build on vacant land, and others that limit foreign buyers from purchasing investment properties. Those who flout the rules in Australia can face stiff fines and even up to three years in prison. And yet, despite all the restrictions, home prices in Australia jumped by about 10 per cent over the last year.

So there are genuine questions as to whether targeting foreigners in Canada will make homes more affordable for Canadians. Some argue it may even do more harm than good. “Are you going to introduce some additional charges with non-residency ownership?” asks Richard Bell, a Vancouver-based real estate lawyer with Bell Alliance. “And what’s the impact on the market if you were to do that?”

Counting foreigners in the housing market is one thing. Then?.