Speculation by Canadians investing in the real estate market is “absolutely” one of the factors contributing to sky-high home prices, says one economist studying housing trends.
In an interview with The West Block guest host David Akin, Mike Moffat of the University of Ottawa’s Smart Prosperity Institute said the focus on speculation by foreign buyers ignores the fact that domestic speculation is part of the problem, too. “The ugly part is some of the measures that they talk about as speculation, it gets a little bit into blaming foreigners for our issues where, there’s a lot of domestic speculation that’s going on,” he said. Read more: Roughly one-third of Liberal cabinet ministers own rental, investment real estate: records The federal Liberals made housing unaffordability a central plank in their 2021 campaign platform and in the months since, have touted the promises made in the campaign and the recent budget that they say will help to ease the crunch.
Those measures include banning most foreign buyers for two years and imposing higher taxes on people who flip properties within 12 months of buying them — part of growing efforts to target the financialization of the Canadian housing market.
Financialization is a term increasingly being used in reference to investors buying up real estate — typically residential real estate that could otherwise serve as starter homes or affordable rental units — and then treating those as financial assets to generate profit, either through resale or raising rents.