FEDERAL BUDGET 2016 Ottawa vows to shed light on foreign home buyers
FEDERAL BUDGET 2016
Ottawa vows to shed light on foreign home buyers
OTTAWA — The Globe and Mail
Ottawa is planning to spend $500,000 to study foreign buyers of Canadian real estate and has earmarked millions more to collect new data it hopes will shed light on the risks the housing market poses to the economy.
The $500,000 will go to fund a year-long study by Statistics Canada on how best to collect data on purchases of Canadian homes by offshore buyers. The move is part of a broader push among federal agencies to track the level of foreign investment in the housing market and comes after B.C. announced its own new measures to require buyers to disclose whether they are Canadian citizens.
“We know that many Canadians, particularly British Columbians, are concerned about the effect of foreign ownership in the housing market,” Finance Minister Bill Morneau said.
Along with studying ways to collect more details about offshore buyers, the federal government separately pledge $13.5-million over five years to the statistical agency to compile new data on the housing market and the so-called “shadow banking” system.
Under the program, Statistics Canada will develop a new “comprehensive residential real estate index,” that will take into account both new and existing home sales. Currently, the federal government tracks sales of new homes, while private sector agencies, such as the Canadian Real Estate Association, compile data on the resale housing market. Along with bringing all home sales into a single index, federal officials said the new measure will help close gaps in existing data, such as sales of new condominiums.
Other measures include money for Statistics Canada to track “financial linkages” in the economy, including collecting data on less-regulated areas of the financial system, such as non-bank financial institutions and private lenders, many of whom provide mortgage financing. The funding will also help the statistical agency develop new ways to better track cross-border financial transactions.
The move is Canada’s response to a program by the International Monetary Fund called Special Data Dissemination Standard Plus that was developed in the wake of the 2008 global financial crisis to share more data between countries on risks to the international financial system, particularly those posed by housing market finance.
Aside from collecting more data, much of the federal budget’s real estate focus came in the form of $2.3-billion earmarked for a series of affordable housing initiatives that include new low-cost loans to developers who build affordable rental housing.
The Liberal government also said it planned to scrap a proposal by the previous Conservative government to create a tax exemption that would allow Canadians to avoid capital gains from selling real estate if they donated the proceeds to a registered charity.
Notably absent from the budget was any mention of the Liberals’ campaign pledge to expand the Home Buyers’ Program to allow Canadians to tap their RRSPs to buy a home if they face an unexpected life change, such as a job relocation or marital breakdown.
Nor did the budget contain any new measures to help cool the Canadian housing market or curb rising levels of household debt. In December, Ottawa doubled the minimum down payment on government-insured mortgages for the portion of home prices between $500,000 and $1-million.
In Tuesday’s budget the government said it would “closely monitor vulnerabilities related to housing and consumer debt and is prepared to implement father measures, should they be needed.”