Prime Minister Justin Trudeau intends to ban foreigners from buying houses in Canada as the country grapples with booming markets that are putting home-ownership out of reach for Canadians.
But the policy, designed to respond to widening political challenges about affordability, is being met with doubts that money from abroad is actually a significant price driver in Canada.
A report from the Canadian Real Estate Association says home prices nationwide were up a staggering 27.1 percent in March compared to the year before, despite a bit of a cool down from an even hotter February.
Canadian households are also feeling the pinch from months of scorching inflation, much of it fed by surging food and gas prices. The annual inflation rate hit a 31-year high in March of 6.7 percent.
Political rivals clearly see mounting cost-of-living fears as a vulnerability for the prime minister. Runaway home prices, felt by younger Canadians in particular, are at the heart of the debate.
The Trudeau government used its recent budget to respond to the worries. Deputy Prime Minister Chrystia Freeland, who also serves as Trudeau’s finance minister, proposed the two-year ban on some foreign buyers in a section dedicated to housing affordability.
“For years, foreign money has been coming into Canada to buy residential real estate,” the budget said about the prohibition, which Trudeau’s Liberals promised to introduce during last year’s election campaign.
“This has fueled concerns about the impact on costs in cities like Vancouver and Toronto and worries about Canadians being priced out of the housing market in cities and towns across the country.”
Trudeau’s ban would prevent foreign commercial enterprises and anyone who is not a Canadian citizen or permanent resident from buying non-recreational, residential property in the country for two years.
The plan, however, also includes many exemptions. For instance, the ban would not apply to refugees, people permitted to enter Canada for emergency reasons, international students on the path to permanent residency and individuals with work permits who are already living in Canada.
According to a 2019 report that said 7.6 percent of homes in Vancouver were owned by at least one non-resident. The paper also showed the figure was 3.8 percent in Toronto and 4.3 percent in Halifax.
The joint report, by Statistics Canada and the Canada Mortgage and Housing Corporation, also highlighted much higher rates of non-resident ownership in condos — for example, 11.2 percent in Vancouver and 7.6 percent in Toronto.