Foreign investment doesn’t tell the whole real estate story: study
Posted July 2, 2016 9:51 am.
This article is more than 5 years old.
VANCOUVER (NEWS 1130) – Foreign investment is a factor in Metro Vancouver’s skyrocketing real estate prices, but it’s certainly not the only factor according to an SFU study.
It looked at the cancellation of the Canadian Immigrant Investor Program and saw a measurable impact on housing prices. But Andrey Pavlov from SFU’s Beedie School of Business says foreign investment doesn’t tell the whole story in Vancouver’s housing market. It is also impacted by things like low-interest rates and bulk mortgage insurance for banks.
“Those two factors keep interest rates and mortgages very low and also don’t remove the incentive of banks to monitor risk so those two factors combined make lending very easy and very loose in Vancouver and as I said it’s those people who stretch themselves beyond their means and bring up prices,” he explains. “Beyond the study, we have to use our common sense and the common sense suggests that the impact of this foreign investment cannot possibly explain the recent run-up. It is big, it is substantial but there are other factors at play.”
He also blames poor transportation infrastructure and what he calls a cumbersome permitting process in Vancouver.
