, although exactly what governments or regulators would want to do at this moment remains to be seen.
“If Canadians are taking out permits and buying resales at such a pace during winter then what does that say when the key spring housing market and vaccines arrive?” wrote Derek Holt, head of capital markets economics at Bank of Nova Scotia, in a recent note to clients. “Policy is arguably overly easy and changes may be afoot in a spring budget.
There is already a policy being worked on in Ottawa that is similar to those measures. In its fall economic update, the federal Liberal government said it would “take steps over the coming year to implement a national, tax-based measure targeting the unproductive use of domestic housing that is owned by non-resident, non-Canadians, which removes these assets from the domestic housing supply.
Yet a federal foreign ownership tax may not really address what’s causing the housing market’s recent flurry of activity, which seems to be driven more by pandemic-related shifts in demand, low mortgage rates, limited supply and an increase in household savings. “The challenge is always what sort of policy intervention would be effective, because often when we’re dealing with issues related to declining housing affordability, the government response is to implement policies that make it more affordable for buyers that can’t get into the market,” said Craig Alexander, chief economist at Deloitte Canada. “What ends up happening is you actually boost demand, which ultimately ends up maintaining the growth in prices.