On January 1, the Prohibition on the Purchase of Residential Property by Non-Canadians Act became law. This initiative by the Trudeau Liberals will have the effect of preventing businesses and individuals outside of Canada from buying residential properties for a two-year period. The Act will apply to census metropolitan areas with a total population of at least 100,000 people, with at least 50,000 living in the core and to census agglomerations with a core population of at least 10,000 people. Recreational properties will be exempt and there is no explicit ban on purchasing larger buildings with multiple units.

The Liberals insist that what they call a “temporary measure to help stabilize the housing market coming out of COVID-19,” will give Canadians greater access to purchasing homes. However, the evidence simply doesn’t support the notion that foreign home buyers are driving the housing crisis in Canada. As Brendon Ogmundson, chief economist with the British Columbia Real Estate Association, remarked in an interview with the CBC “…this is very much a political policy, more than an economic policy.”

As if to confirm that this measure has a lot more to do with xenophobic scapegoating than the pursuit of meaningful solutions, a spokesperson for Finance Minister Chrystia Freeland defended the legislation with the ugly comment that “Houses should be homes for Canadians to live in and not an investment asset for foreigners.”

The dangers of this cynical deception, at a time of hardship and uncertainty, are only too obvious. For all their claims to progressive values, the Liberals are playing to nativist impulses as shamefully as any right-wing Tory. As Nathan Lauster, an associate professor of sociology at the University of British Columbia, told the CBC in 2018, “We’ve been led to believe that effectively foreign buyers are all speculators, investors and vacation-home owners while everyone who is in Canada is living in property they own.” Yet this myth making is clearly at odds with reality. “You’re talking about five times as much domestic investment in real estate compared to foreign investment in real estate by value, at least in the Vancouver market.”

In BC, the blaming of housing woes on foreign home buyers has been especially virulent. In 2016, in a climate of anti-Chinese sentiment, the BC Liberals imposed a 15 percent property-transfer tax on foreign buyers purchasing residential properties in Metro Vancouver. When the NDP took power, its first budget in 2018 increased this levy to 18 percent and extended it to other areas of the province. In addition, it targeted foreign homeowners with a speculation and vacancy tax. The City of Vancouver had already imposed an empty-home tax that targeted unoccupied homes owned by foreigners.

For all the fanfare involved in these appeals to base sentiments, the measures were predictably unsuccessful in addressing BC’s housing problems. British Columbia Real Estate Association Chief Economist Ogmundson confirmed that homes did not become more affordable as a result of targeting ‘non-Canadians.’ In a 2021 interview with the Georgia Straight he affirmed: “In terms of overall affordability, we’re clearly not in any better place now than where we were in 2016.”

Real causes

That the provision of housing, as a most basic social need, is in a dire state in Canada can’t be disputed. Spurred by high demand, home prices spiralled upward during the COVID-19 pandemic. The Bank of Canada’s response to the inflationary crisis, which was to raise interest rates, has cooled demand somewhat and caused prices to fall but this has been offset by increased mortgage costs that have rendered home ownership even more precarious.

Faced with these trends, many who might previously have considered buying a home are now relying on the rental market. This is leading to an explosion in rental costs and, with so many tenants finding it desperately hard to pay the rent and meet other basic needs, the threat of homelessness is looming over more and more people. The harsh impact of Canada’s superheated housing market goes well beyond the plight of the hard-pressed home owner.

As severe as the housing crisis is, however, it cannot credibly be attributed to foreign home buyers. That the federal government is pointing the finger in this way is especially cynical and reprehensible, given the part that this level of government has played in generating the conditions that have created the present situation. In the 1980s, the federal government’s welfare-oriented state intervention in social housing supply gave way to a neoliberal reliance on the private sector, which went hand in hand with increased housing inequality.

The commodification of housing was taken to extreme levels, fueling speculation and a frenzy of upscale urban redevelopment. Mounting household debt was part of this process, as people sought to secure housing. As Yushu Zhu, assistant professor in the Faculty of Urban Studies and Public Policy at Simon Fraser University, explains, the financialization of housing leads to an increase in residential mortgage debt as buyers look to finance housing: in Canada, she notes, “the residential mortgage debt to GDP ratio rose from 26 percent, to a whopping 68 percent between 1981 and 2016.” While this situation delivered vast profits to developers and bankers, it also ensured that many would be denied the right to decent housing and that the housing market would be prone to disruption and crisis.

To redress the vast housing imbalances which result in nearly one-third of Canadian households living in inadequate, unaffordable or unsuitable dwellings, the relentless commodification of housing must be halted. As David Moscrop argues, “there is no way to address the housing crisis without major new investment in dedicated publicly-funded, affordable housing.”

While Canada is far from alone in having generated an oversupply of upscale housing and in turning its housing market into a source of social crisis, the problem here is particularly severe. As interest rate increases drive people to the wall and create conditions for a severe economic downturn, high levels of household debt and impossible housing costs constitute a ticking time bomb. The Canadian economic director at Oxford Economics, Tony Stillo, predicts that “Prevailing household debt and housing imbalances will mix with pandemic and geopolitical forces to make Canada’s recession deeper than most advanced economies.”

In a breathtaking piece of hypocrisy, a press release issued by Housing Minister Ahmed Hussen shortly before the new foreign homebuyer law was adopted stated that “Homes should not be commodities [they] are meant to be lived in, a place where families can lay down roots, create memories and build a life together.”In fact, as former UN Special Rapporteur on adequate housing, Leilani Farha, has observed, “Under the new financialized model, housing isn’t viewed as a home or a place where families grow, a place where you generate memories. Housing is an asset. It’s a place to park capital.”

The government that Hussen is part of is complicit in the damaging process of commodifying housing and its foreign homebuyer legislation is a manipulative effort to cover its tracks.

In Toronto alone there are some 65,000 condos sitting empty, purchased mainly for speculative purposes. We may be sure that the vast majority of those who are engaged in this parasitic activity are based right here in Canada. However, even if a minority of these people live outside of the country, it matters little. The problem lies not in the nationality of the players, but in a situation where the provision of housing is dominated by profit-making and not shaped by the needs of communities.

By targeting the mythical threat of the foreign home buyer, the Liberals seek to divert our attention from the real factors driving our intensifying housing crisis. In doing this, they are ready to fan the flames of the ugliest xenophobic sentiments in a way that makes a mockery of their progressive credentials. We should treat this measure with the contempt it deserves and focus on the struggle to make housing a human right rather than a commodity.

John Clarke is a writer and retired organizer for the Ontario Coalition Against Poverty (OCAP). Follow his tweets at @JohnOCAP and blog at johnclarkeblog.com.