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Greg Bonnell

Reporter

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The Vancouver and Toronto housing markets are “too hot for comfort” and policymakers aren’t addressing a key concern – foreign buyers, BMO’s chief economist said Wednesday.

In an interview with BNN, Doug Porter said the two hot Canadian markets “have really become disentangled from underlying economic realities.”

“The concern is the wave of foreign investment,” said Porter.

“A lot of the measures taken in the last five or six years simply do not address that at all. They don’t correct the underlying issue.”

Porter says the best proposal he’s seen focuses on property taxes. In short, make property taxes “somewhat tax deductible” in Canada while “cranking up” property taxes on high-end homes.

“It can be a general increase in high-end property taxes that’s then written off against your income,” said Porter.

“If you are making income in this country, then you’re not going to be paying any more money.”

Across the street at CIBC, deputy chief economist Benjamin Tal has been advocating a “flipping tax” that would be applied to foreign speculative investors.

While it wouldn’t target people buying real estate in Canada while working or going to school, it would take aim at the most problematic element of foreign investment, Tal has argued.

On Wednesday, Tal told BNN he expects Ottawa’s next move to tighten the mortgage market will be targeted at foreign investors.

The calls are growing for Ottawa to act in the face of record home sales volumes and soaring prices, with the OECD and Scotiabank CEO Brian Porter both sounding the alarm over hot housing this week.