Would banning Blind Bidding slow the growth of Canadian real estate prices?

According to a recent analysis from policy think tank Smart Prosperity Institute, banning blind bidding on homes — a reform the Liberal Party has promised to implement — could cause home prices in Canada to climb even faster.

Blind bidding, in which buyers make an offer on a condo or house based on their projected worth and what they expect others to offer, is blamed for driving up property prices across Canada, according to the Liberal Party’s housing programme. The notion is that because purchasers are unable to see what other individuals are offering, they may place unreasonably high bids.

Evidence, according to the paper, not only refutes this notion, but also implies that open bidding will result in higher pricing.

The reasons for this are unclear, but they are likely to involve public bids “creating a signal that a property is exceptionally valuable, in a manner that less visible bids do not,” as well as bidders steadily outbidding each other into a higher price range.

According to the survey, increased housing inventory will reduce competitiveness and bidding wars, resulting in lower real estate prices across the country.

“There is limited, though, compelling academic evidence that bid transparency leads to higher real-estate prices,” the report reads. “Studies examining real-estate transactions in New Zealand, Australia, and Ireland, as well as studies examining land sales in Singapore and the United States, have found increased bid transparency associated with higher, rather than lower, prices, particularly in overheated markets.”

“To ensure housing is available and attainable for all Canadians, the federal government should focus on relieving the bottlenecks preventing an adequate supply of family-friendly, climate-friendly homes from being built,” says the report says.

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