Do Foreign Buyer Taxes Affect House Prices?

Abstract

This paper studies the impact of foreign buyer taxes on house prices using recent law changes in Canada, Australia, and New Zealand. Counterfactual house prices are estimated for each treated location, combining prediction techniques from machine learning with inference methods from the synthetic control method literature. In general, the foreign buyer taxes we studied had negative, large, and persistent effects on house price growth. We found bigger effects in locations with higher taxes and with larger immigrant shares. Alternative outcome variables, including population growth, GDP growth, and unemployment rates, were either unaffected or slightly affected in ways that do not confound our results.