Vancouver’s housing bubble is about to feel the squeeze from the provincial and city governments.
British Columbia will end self-regulation of the real estate industry as it tries to rein in unethical practices that may be stoking home prices in Vancouver, where the price of a typical detached home rose 37 percent in the past year.
Also on the way may be a new tax on properties left vacant by their owners, Bloomberg reported Thursday.
“The real estate sector has had 10 years to get it right on self-regulation, and they haven’t,” the Canadian province’s Premier Christy Clark said at a news conference Wednesday.
“So we are going to end the right to self-regulate.”
The move follows recommendations released Tuesday by an independent panel to impose tougher oversight and greater transparency in the industry.
Public pressure for a crackdown has been mounting in Vancouver, where the average detached home now costs C$1.5 million (US$1.2 million).
The government will enact the panel’s recommendations to raise fines 25-fold to as much as C$500,000 on brokerages that engage in misconduct, and to ban agents from representing both buyers and sellers, Clark said.
The premier also said the provincial government has started working with the city of Vancouver on ways to tax owners of empty properties.
Vancouver Mayor Gregor Robertson said in a June 7 interview with Bloomberg that homes that aren’t lived in or rented out are essentially business holdings that should face similar levies.
Provincial Finance Minister Michael de Jong met Robertson on Monday “to really start digging into work” on how to impose such a tax, Clark said.
The government will appoint a new superintendent dedicated to real estate, who will take “all authority for regulation, penalties and for rulemaking”, she said.
The job was advertised Wednesday.
Record home prices have prompted the heads of National Bank of Canada and Bank of Nova Scotia to suggest tighter mortgage rules to cool demand.
Vancouver’s housing market is in an “outright bubble”, David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc., said on Bloomberg TV Wednesday.
While BC has already taken steps to address affordability — including a transfer tax on luxury homes that levies an extra 3 percent on the value of a property above C$2 million — more work lies ahead, Clark said.
“In the coming weeks we’re going to take more action,” she said. “All options are on the table.”
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