The Canadian Housing Boom Fueled by China’s Billionaires

> The affordability measure is based on average household income of C$64,000 and a 25-year mortgage with a 25 percent downpayment.

So if most houses are a million you only need 4 years salary for the downpayment.

Ouch.

As mentioned in this article, in most cases, father and the business do not move, only part of the family. Apart for spending in property and luxury items, looks like wealthy migration are passive participants in the economy - not starting businesses employing people, or paying much tax.

Investors who rent out their properties might change the price:rent ratio, but they don't contribute to the housing shortage.

I wonder, what are wealthy people more likely to do: (1) but a hand made leather bag from a local hipster workshop (which I would do) or (2) buy a 10x more expensive Louis Vuitton bag which was probably made in a giant factory in China? And generalize to other goods/services.

(1) at least supports local economy while (2) supports limited number of middle men.

I'm not saying (2) is bad, but if it's only wealthy people spending their money only on imported goods then it is not good.

This lacks recognition. So many factors could come into play. E.g.

The downstream effects of house prices has to hit entrepreneurship. Previously a bunch of people would be in a good place to take a couple years off to start a business mid-career. Now people have these huge mortgages where your ability to start a business is hampered by your ability to get a financial buffer to take this year or 2 off. And lets not forget most businesses are created form people mid-career, not the TV typical university dropout.

And small community business, how will they exist in the future. If someone wants to set up a local 'physical presence' vet/daycare type business that are typically mixed into residential areas the threshold is now too high to exist let-alone set up a new business. How can a daycare buy a million+ dollar house and expect to make money paying that back on having 30 local kids being looked after.

Also what is going to happen with social services like retirement and periods of higher unemployment. I suspect society will be less stable as either the government has to foot much higher rent costs (unlikely) or we will see increased population movements during retirement, and now the government has to look after older people that before a family who lived nearby could help out with. And during low employment cycles society can no-longer absorb this downturn if people have large income-to-debt loans. Historically people could 'tighten belts' for a year while things improve, harder when you're neck deep in debt. So we will again see more movement of people, debt default etc. It will serve to exacerbate recessions etc.

Also these higher prices skew the economy. When people are tied up in these ever increasing loan/income ratios there will be less spending on dining, holidays, hobbies etc. It will weaken the economy by concentrating the spend in limited areas.

From this I really believe we should be talking seriously about ensuring affordable housing for owner occupiers. Residential investment need to be discouraged (note I'm not saying stopped) as a speculative asset class. I've seen a few suggested methods to achieve this but I feel the simplest is to place a yearly 'asset tax' on non-owner occupied residential property (I would also include farms). Having a % tax would make it easy to adjust to find the right balance given economic cycles change. Also this would encourage property hoarders not in heavy debt to sell for lower taxed asset classes. This I feel is important as most solutions focus on controlling the investment lending side which is limiting in reach. And the 'add supply' will always be a limited case solution.

Good luck. It seems most western governments have stopped caring about looking past the most immediate budgets.