Foreign Investment Won’t Help Real Estate Prices Experts Warn

Foreign Investment Won’t Help Real Estate Prices Experts Warn

A ban on foreign investments in the real estate sector, or even a total ban, will not make any difference when it comes to real estate prices, experts have warned.

The experts’ comments come amid requests by many people over the past few months who want the government to ban foreign investment as a way to combat high prices in Vancouver. According to them, the pricey real estate market in Vancouver that they have been complaining about can easily be solved by simply banning foreign investment.

According to Thomas Davidoff, who is with UBC’s Sauder School of Business, there is bound to be a short-term effect on homeowners in such upscale areas because almost 50% of buyers in upscale neighborhoods are actually foreigners.

“In the short run that would have a huge impact on price, now if you can hang on Vancouver is going to be an expensive place to live,” Davidoff explains. He went on to add that, “If foreign buyers exit, wealthy Canadians are going to step in so I don’t think in the long run there is a lot of risk that somebody over a 20 or 30 year horizon is going to have horrible investment performance.”

According to Davidoff, the only people who stand to benefit in an event that a ban on foreign investment is put into law is condo owners who will not see their condo prices depreciating as compared to homes and as a result they will end up taking advantage of lower detached home prices.


A ban on foreign investments in the real estate sector, or even a total ban, will not make any difference when it comes to real estate prices, experts have warned.

The experts’ comments come amid requests by many people over the past few months who want the government to ban foreign investment as a way to combat high prices in Vancouver. According to them, the pricey real estate market in Vancouver that they have been complaining about can easily be solved by simply banning foreign investment.

According to Thomas Davidoff, who is with UBC’s Sauder School of Business, there is bound to be a short-term effect on homeowners in such upscale areas because almost 50% of buyers in upscale neighborhoods are actually foreigners.

“In the short run that would have a huge impact on price, now if you can hang on Vancouver is going to be an expensive place to live,” Davidoff explains. He went on to add that, “If foreign buyers exit, wealthy Canadians are going to step in so I don’t think in the long run there is a lot of risk that somebody over a 20 or 30 year horizon is going to have horrible investment performance.”

According to Davidoff, the only people who stand to benefit in an event that a ban on foreign investment is put into law is condo owners who will not see their condo prices depreciating as compared to homes and as a result they will end up taking advantage of lower detached home prices.

 

 

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