Property tax will give younger citizens in British Columbia a better chance to own a home
Recently, tax measures introduced by the British Columbian (BC) government, marginally increasing prices to control investment in housing purchased by buyers from Hong Kong and China, have come in for criticism. The aim – clearly stated by Christy Clark, the BC premier – was to control rapidly rising house prices in Vancouver.
Some of this criticism has come from the realty world, as a bleat about the adverse effect on the real estate business.
Yet, this industry is currently generating billions, from cash spewing out of China (much of it of doubtful provenance), largely unchecked due in part to the short-sighted and acquisitive policies of some Pacific Rim governments.
In Sydney, the problem is worse than in Vancouver. Those living in both cities have seen prime housing in many suburbs go to thousands of wealthy Chinese, with the prices of all property ballooning. This has progressively disenfranchised younger generations. Property prices in many locations have compounded at 10 plus per cent per annum, putting even modest dwellings out of the reach of tens of thousands of young families.
That the BC government has done something about it should be roundly applauded. Sadly, Australian premier Malcolm Turnbull and his predecessors seemed happy (until recently) to fiddle while Sydney and Melbourne exploded.
The fact that the origin of much of this new-found Chinese wealth pouring into both countries is problematical should be of great concern; however, this was seemingly overlooked in Canberra until recently. Some restrictions are now imposed on these investor groups, but it is too early to determine their effectiveness.
In BC, there are half a million Hong Kong Chinese with Canadian passports. Most of these in-residence Chinese families are already sitting pretty in mansions in Vancouver, as is very much the case in Sydney and Melbourne.
Family groupings have become springboards from which immigrant relatives enter property pools, benefiting from family assistance and government subsidies. That is, unless something similar to Ms Clark’s initiative in BC intervenes.
A two-tiered property market system has been used effectively in the Channel Islands for many decades, cushioning islander generations from marauding tax-haven-seeking millionaires, by property tax and market adjustment mechanisms.
It is most encouraging that Ms Clark has taken this initial step to stop the rot. Let us hope that Australia’s leaders remain encouraged to exhibit some fortitude and follow suit.
John Pym, Tuen Mun