The government of Canada has banned foreigners from buying residential properties in the country as home prices are surging in the domestic economy. From 1st January 2023, no foreigners can purchase homes in Canada.
This move from the Canadian government comes amidst allegations that foreign buyers are responsible for steep home prices in the country.
Statistics from the Canadian Real Estate Association (CREA) state that the price index has gone up by more than 38 per cent from the end of 2019. This current stretch of price surge began soon after the start of the pandemic in 2020. The average price for homes in Canada peaked at 800000 US Dollars in February 2022.
Various Canadian politicians including current prime minister Justin Trudeau had stated that a surge in home prices due to increased purchases by foreign buyers is a real problem. This is what the election campaign website of Justin Trudeau says about the home price crisis “This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors,”.
Numerous high-net-worth individuals and investors from the United States and Central America purchase residential properties in Canada as part of their investment strategy. They also purchase property as vacation homes. Following the pandemic and strict quarantine measures, more and more people started purchasing properties in Canada.
This increased buying led to a surge in demand and a decrease in the supply of homes in the country. Even Canadians were finding it difficult to purchase residential properties.
Some politicians in the country are also blaming the central bank for the high home prices. As the central bank is increasing interest rates in the economy to bring down the high inflation rate, it is having an impact on mortgage rates in the country. Higher mortgage raises are also adding to the vows of Canadian home buyers.
The decision of the government to ban foreigners from purchasing homes has not gone down well with the real estate association in the country. They are saying that administrations in the United States and Mexico might retaliate by banning Canadians from buying homes in those countries.
Numerous retirees in Canada purchase winter homes in various parts of the United States. During the harsh Canadian winter, they move to their homes in the United States. Retirees also consider this as an investment opportunity.
Real Estate Association also voiced concerns that the move to ban foreigners from owning homes in the country might adversely affect the stature of Canada as a “multicultural welcoming country”