Canada's housing sector has been whipsawed by policy changes over the past year as governments have tried to cool overheated markets in Vancouver and Toronto and stave off a consumer debt crisis.
In the year since the B.C. government introduced a foreign-buyers tax in the Vancouver housing market, federal and provincial governments have announced a variety of policy changes and proposals that have cumulatively turned residential real estate into one of the most actively regulated sectors in the economy.
The changes have included a combination of vacant homes taxes, breaks for first-time home buyers, tighter mortgage qualification rules and restrictions on foreigners buying homes.
Together the reforms have created a major national experiment in cooling off an industry sector in the face of overwhelming consumer demand. Here are highlights of some of the most significant reforms announced in the past 12 months, along with the market impacts.
The B.C. government surprised Vancouver residents last summer when it announced a new 15-per-cent tax on foreign home buyers effective Aug. 2, making Vancouver the first jurisdiction in Canada to require non-residents to pay a tax on home purchases.
The tax appeared to have an immediate impact, with house sales in the Vancouver region falling 26 per cent in August compared with a year earlier and average prices sliding through the fall.
However, many observers said the tax hit as the market was already softening, spurring an even greater response. Sales in the Vancouver region had climbed just 0.6 per cent in June, 2016, and fell 19 per cent in July compared with the same month a year earlier as many home buyers had already started to leave the market due to affordability concerns.
Coupled with the unexpected new tax, total sales fell steadily through the fall and winter, and the average price for all home types dipped to a low of $896,000 by January, 2017, down 4 per cent from the benchmark index high of $930,400 in July. Detached home prices fell 6.5 per cent from July to February.
But the price decline began to slowly reverse in February and prices hit new record highs by April and continued to grow, although the pace of new sales slowed. The benchmark index price for all types of homes in Vancouver was $998,700 in June, up 7 per cent from July last year before the tax was announced.
The result is that the Vancouver market appears to have largely shrugged off the tax, said Elton Ash, regional executive vice-president of Western Canada at realty firm Re/Max.
"The tax last year was introduced as a political move more than anything else, knowing there was a spring election around the corner," Mr. Ash said. "And ultimately it hasn't had any effect."
Mr. Ash said housing demand returned quickly, and he believes foreign buyers will begin to factor in the tax as a cost of doing business and will not be significantly deterred by the additional cost. Local residents meanwhile are slowly stepping back into the market after spending a few months on the sidelines assessing the impact.
"You really can't tax your way out of a housing problem," he said.