To solve Dutch housing crisis, proposal aimed to ban the rich from buying some homes. Could it work here?

As Canada and other countries try to deal with their respective affordable housing challenges, a Dutch cabinet minister recently attempted to even the playing field and expand home ownership among the less wealthy.

Housing Minister Hugo de Jonge had proposed a law that would have allowed municipalities to force homeowners, whose homes were worth up to $355,000 Euros (about $517,000 Cdn) to put their property on the market only to low and middle-income earners.

That meant local governments could refuse to grant residency permits to wealthy potential buyers and keep them out of the market for homes up to that value

The problem the policy is trying to fix is one that's particularly acute in Canada, said Jeremy Withers, the outreach co-ordinator for the University of Toronto's School of Cities Affordable Housing Challenge Project.

"And that problem is that prospective first-time buyers are finding it increasingly difficult to compete in bidding wars for housing," said Withers, who is also a PHD candidate in the department of Geography & Planning at the University of Toronto.

Over the past decade, Withers said, a fast-growing share of housing has been bid up and acquired by higher income Canadians who already own their homes but are building up portfolios of investment properties. 

For example, 45 per cent of Ontario condo apartments and 18 per cent of Ontario houses are not owner occupied, he said, citing Statistics Canada data.

"I think policies that aim at curtailing demand from kind of wealthy, high income bidders would likely help to mitigate continuing rise in prices and wealth inequality that's really come to define Canada's private housing system."

De Jonge's proposal, while initially looking like it might have support in parliament, was ultimately defeated, but not before stirring up controversy and opposition for infringing on the property rights of homeowners.

Still, Dutch proponents of the law echoed Withers' comments, noting that much cheaper houses are now out of reach for people with an average salary. 

"Now house seekers in a village are outbid by people from outside who have a lot of money to spend," Christian Union party member Pieter Grinwis told the Netherlands' AD newspaper.

Although Canada faces a similar issues, some housing experts here questioned whether such measures are the right approach.

"For the Canadian context, what we need more fluidity in the market, not more constraints," said Mathieu Laberge, an government advisor at KPMG and former chief economist at the Canada Mortgage and Housing Corporation.

"When you look in the literature, coercive approaches, they're well intentioned, but they tend to bring in unforeseen negative consequences," Laberge said.