The Role of Foreign Capital in Vancouver's Housing Market

The city of Vancouver has seen record high home prices in recent months. The housing price inflation has led to the city becoming one of the least affordable cities in the world in terms of housing. The rapid price increase has been blamed on various supply and demand side issues. This paper argues that foreign capital is playing a significant role in driving up home prices in Vancouver and proposes a series of policy options to mitigate the impact of foreign capital. Using secondary data analysis, the paper demonstrates that factors such as income, population growth, and supply of homes have not influenced home prices at a significant level. The paper provides evidence that influx of large sums of foreign capital and investment activity of High Net Worth Individuals are the primary drivers of housing prices in the city. Keeping this in mind, the policy options in the paper have been developed through substantive background research, expert interviews, jurisdictional scan and secondary data analysis. Policy options are evaluated using a criteria and measures matrix, which reflects the societal and government management objectives of effectiveness, budget impact, and stakeholder acceptance. The paper recommends using a Progressive Property Tax in conjunction with a Speculation Tax to mitigate some of the effects of foreign capital.