VANCOUVER (NEWS1130) – On the heels of a report that says Metro Vancouver faces labour shortages if housing prices continue to increase, the mayor of Vancouver is floating an idea to stem prices.
Gregor Robertson is now advocating a speculation tax.
“We definitely need taxation tools that discourage speculation on real estate. It’s clear that rampant speculation on real estate is driving up prices in Vancouver. Vancouver needs the BC Government to take action on creating a speculation tax and recognize that we need a fair and level playing field to make housing more affordable for residents in Vancouver, and throughout the province,” he says in a written statement.
A speculation tax essentially penalizes home owners who sell their properties within a small time-frame, presuming they’ve bought the home only to make money, not to live in it.
But Tsur Somerville of UBC’s Centre for Urban Economics says there’s very no proof speculation is driving up prices.
“The whole discussion around housing affordability revolves around a variety of bogeymen that we think are the cause of high house prices, without any substantial evidence that that’s the case,” he notes.
“Think back to 2006 when people would line up overnight to buy a pre-sale condo then flip it within 30 days. That’s the sort of thing one would be looking for as proof of rampant speculation. There is very little evidence that is happening in the market right now.”
A Vancouver Sun story recently noted that the average time between the purchase and the selling of a piece of property in West Vancouver was only six months, with asking prices going up by 40 per cent in that time frame.
But Somerville is reluctant to call that rampant speculation, because he says prices aren’t going up fast enough for that to be the case.
And he says a speculation tax might be a hard sell to home-owning voters, who might be worried any kind of new tax might make it more difficult to sell their homes.
Voters in San Francisco recently defeated an anti-speculation tax that would have added a levy to the sale of multi-unit buildings, if they were flipped within five years of purchase.