The Liberal Party of Canada’s dim view of blind bidding might be, well, myopic.

On the campaign trail, the party proposed proscribing blind bids, presumably in favour of open auctions, going so far as to mull outlawing it as a way to stem runaway housing prices. However, a report from Smart Prosperity Institute asserts such an interdiction would actually result in prices rising faster.

“We examined the evidence and found that blind bidding does not ultimately drive up home prices, and requiring open bidding in a hot real estate market may lead to higher, rather than lower, home prices. This is supported by both empirical evidence and economic theory,” Dr. Mike Moffatt, author of the report, said in a news release.

Among the report’s key findings is that home prices in Sweden, which uses auction-style bidding, have risen faster during the COVID-19 pandemic than they have in Canada. Additionally, New Zealand permits English auctions and its housing prices have been the world’s fastest growing for the last two decades. In short, insufficient housing inventory is the real culprit and auctions exacerbate affordability woes in hot markets, claims the report, which was funded by the Canadian Real Estate Association (CREA).

“It turns out with the study, and there are limitations with it, auction-style bidding leads to even higher prices, so if your objective is to lower prices, banning blind bidding won’t do it,” CREA’s CEO Michael Bourque told STOREYS. “On the other side of it, I think consumers want more transparency in the transaction so that they can be assured that there are really other offers, and of course they would love to know more about those offers, but if they get into an auction this study shows they might pay even more.”

Continue to read on: STOREYS