Finance Minister Christiaan Freeland made the announcement on Thursday Foreigners will be barred from purchasing real estate in Canada For the next two years in an effort to address the housing crisis. Home prices in Canada have risen by more than 50% since 2020, as demand continues to rise and available inventories dwindle.
The Bank of Canada announced a record rise in housing costs last February, with benchmark prices reaching C $ 869,300 across the province. Over the years, foreigners have seen Canada’s growing real estate market as a safe haven for money. Chinese investors have found it particularly profitable when converting the yuan to CAD. The Trudeau administration has previously established one 1% tax on vacant foreign owned land, And as I warned, any tax will remain in place and will probably increase. Vacancies are a problem, but they are not the only culprits.
Simeon Papilias, founder of the real estate investment firm, said: “I do not think this will reduce prices, although I think it will eliminate at least some of the competition in the most competitive market in Canadian housing history.” “I don’t think a two-year band-aid will affect the fundamental lack of supply.” This is the general consensus in Canada because people only want affordable housing and believe that these measures will have a positive effect on prices. The ban is likely to last for more than two years, as lawmakers are confused about what drives the real estate market.
Some convenient loopholes to appease those who blame foreigners for real estate inflation make this law an empty gesture. The ban does not prohibit purchases by corporations, so Vanguard and BlackRock can continue to make a profit when individuals face an understanding of the new law – but only certain individuals without the money to bypass the system. Permanent residents, foreign workers and students will be excluded from the law. Foreigners who plan to purchase their primary residence in Canada are not prohibited from purchasing their property. So Canada does not aim to exclude all foreign real estate investments; The government only wants to show that they are working to reduce real estate costs while this measure will not do anything like that.