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Foreign buyer taxes and house prices in Canada: A tale of two cities

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  • Du, Zaichao
  • Yin, Hua
  • Zhang, Lin

Abstract

In August 2016, the government of British Columbia imposed a tax of 15% on foreign entities buying residential property in Vancouver. A similar tax was imposed in Toronto in April 2017. This paper empirically evaluates the effects of foreign buyer taxes (FBTs) on house prices in Vancouver and Toronto, using a variant of the panel program evaluation method with city-level data and a regression discontinuity design method with house-level transaction data. Our results show that the FBT reduced the house prices in Vancouver by around 5% from 2016:M08 to 2017:M12, and by something within the range of 7% to 9% in Toronto from 2017:M04 to 2017:M12. These effects were concentrated in the single-detached home segment in both cities.

Suggested Citation

  • Du, Zaichao & Yin, Hua & Zhang, Lin, 2022. "Foreign buyer taxes and house prices in Canada: A tale of two cities," Journal of Housing Economics, Elsevier, vol. 55(C).
    • Handle: RePEc:eee:jhouse:v:55:y:2022:i:c:s1051137721000620
    DOI: 10.1016/j.jhe.2021.101807
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    References listed on IDEAS

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    More about this item

    Keywords

    House price; Foreign buyer tax; Panel program evaluation; RDD;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access

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