Canada To Temporarily Ban Foreign Property Buyers

Canada’s government has announced that it will ban most foreign property buyers for two years, in a bid to cool the country’s runaway housing market, reports Abode2.

Canadian property prices have been escalating for a while now, jumping by 20% in the last 12 months. The OECD’s index points to over 65% growth since 2015, with average house prices now more than nine times the average household income.

Knight Frank’s latest Global Cities Index tells of 31% property price inflation in 2021 in Halifax, with +25% in Hamilton, +17% in Toronto, and +16% in Ottawa and Montreal.

A foreign buyer ban is not a surprise move. Canadian Prime Minister Justin Trudeau pitched the policy during election campaigns last year. “You shouldn’t lose a bidding war on your home to speculators,” he argued. “It’s time for things to change. No more foreign wealth being parked in homes that people should be living in.” And New Zealand did a similar thing back in 2018.

Students, permanent residents and those buying a principal home will be exempted from the ban.

Other newly-announced measures to cool the property market include higher tax rates for people who re-sell their home within a year.

Even before these policies, the number of foreign buyer in Canada has dropped sharply. Toronto-based Bullpenn Research & Consulting estimates that foreigners accounted for just 1% of purchases in Covid-hit 2020, down from 9% in 2015 and 2016.