The double edged sword of protectionism

Late last year, Vancouver imposed a 15% tax on foreign investment in the city as well as a 1% per year tax on empty property. This was done in order to make the city more affordable for its inhabitants, and to thward an onslaught of Chinese investment into the real estate market.

Now Vancouver’s loss is Seattle’s gain. The investment dollars have simply moved southward, making Seattle a booming market. Web search data indicate that Chinese interest in Seattle real estate has goine up 125% year over year while that in Vancouver dropped 37% in December.

Other markets are getting into the protection game. New York proposed a 2.5% tax on properties of $2M or more which are the sweet spot of investors.London and Australia are taking their own measures.

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