In the summer of 2016, the market for detached houses in Vancouver and neighbouring municipalities was on fire. Prices were up more than 20 per cent from the start of the year, pushing the increase over the preceding three years to about 80 per cent. The cost of a house had gone from expensive to stratospheric.

Amid the mania, what or whom to blame coalesced around an outside force: foreign capital, particularly money that seemed to be pouring in from mainland China.

The provincial government, after years of inertia, sprung into action. First reading of a surprise bill aimed at cooling the market came on July 25 of that year and received royal assent three days later.

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The legislation created the foreign-buyers tax, a 15-per-cent levy on foreign nationals or corporations that purchase residential properties in the Vancouver region. The bill also amended the City of Vancouver’s charter to allow a vacancy tax. The measures were the first major moves to curb demand that helped drive housing prices higher, in particular demand deemed to be speculative.

A lot has happened since that summer and not just in British Columbia.

B.C. increased the foreign-buyers tax to 20 per cent and expanded it to more areas of the province; it also added a new vacancy tax in areas beyond Vancouver and new taxes on high-end properties.

Ottawa introduced a tough new stress test for mortgage applicants, making it harder to get a loan. Ontario imposed its own foreign-buyers tax of 15 per cent in the Toronto region. Mortgage rates climbed through 2017 and 2018 – before sliding this year.

And in Vancouver and Toronto, money laundering has since been exposed as a factor in elevated real estate prices.

After the B.C.’s foreign-buyers tax was enacted, housing prices fell. Then, they rose again and eclipsed previous highs. In the past year or so, prices have fallen on the west coast, but are still rising in Toronto.

Given the gyrations, it isn’t easy to disentangle one policy from another or to precisely measure the impact of any individual government decision.

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But a Globe and Mail analysis this week of data collected by B.C.’s Finance Ministry shows a large decline in the activity of foreign buyers in the Vancouver region. This suggests the considerable tax imposed on foreigners has helped quell the appetite of global capital.

In March, April and May of this year, one out of every 40 purchases in the Vancouver area involved a foreign buyer – 2.5 per cent. In 2016, in the months before the foreign-buyers tax was enacted, the rate of international purchases was 13.2 per cent – more than one in eight deals, The Globe found.

The data underscore several lessons. The decline in foreign buying shows a straightforward piece of policy, one that is easily understood and has a specific aim, can work well.

But the downs and ups and downs of real estate prices after the tax was imposed also shows the market for housing is complex and no single factor has an outsized influence, save for perhaps a spike in interest rates or a serious recession.

As well, the central factor that led to the foreign-buyers taxes and other policies still plagues Vancouver and Toronto: the cost, whether of a single-detached property, a townhome or a condo, remains well above the reasonable reach of local residents’ average incomes. The two cities are among the dozen most expensive housing markets in the world.

With rapid population growth in both regions, it’s clear that rising house prices are not just the fault of foreign buyers, but are also linked to domestic factors.

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One in particular stands out: Canadian housing policy is still largely rooted in the last century. Too much of the land in Toronto and Vancouver is reserved for single-detached homes, which means the cost of the little land available for multifamily housing is unduly inflated.

As well, too many owners of single-detached properties in Vancouver and Toronto oppose development under the guise of neighbourhood character – and these voices carry too much weight among elected officials.

The foreign-buyers tax in B.C. shows smart government policies can work. But their relatively limited impact also shows housing policies must be more ambitious if affordable housing for Canadians is the goal.

We will look at possible solutions in an upcoming editorial.