This morning, as predicted, the Bank of Canada cut our interest rate by .05 per cent. Ostensibly, the move is to head off a recession — spurred mostly by slumping oil markets that have dampened Alberta's economic outlook — lower interest rates mean Canadians will spend more.
Lower interest rates also mean cheaper mortgage rates, which in turn will push up housing prices, particularly as investors look for safe places to park their money, like Vancouver.
Canada isn't the only large land mass nation faced with a recession though. China is experiencing an economic slowdown and an extremely volatile stock market, which will spur investors there to look for safe places to park their money, like Vancouver.
While other Pacific Rim nations and states (Australia, New Zealand, Singapore, Hong Kong, China) have shored up their real estate markets with tax and duty programs to protect housing stock for locals — British Columbia remains mired in a do-nothing holding pattern, citing insufficient data, lack of evidence, and possible impacts on existing homeowner equity.
Meanwhile our housing bubble continues to grow, unfettered and unrestrained, waiting — like all bubbles do — to inevitably burst.
I hate to sound like a broken record on this — but we need provincial leadership on this issue. Now.
Over $1billion in provincial property transfer taxes are directed to general revenue rather than to affordable housing in the jurisdictions that are generating that wealth. Let's take the advice of the BC Chamber of Commerce and others and fix our property transfer taxes, track corporate and foreign investment