Foreign buyer bans certainty based on election promises
The smoke cleared. The dust has settled. The votes were counted and Prime Minister Justin Trudeau and the Liberals formed a minority government. But what does this mean for the Canadian real estate market?
During the federal election campaign, it was clear that housing was one of the most important topics among all leaders and candidates. From Grits to Conservatives to New Democrats, federal leaders have understood that housing is a critical concern for many Canadian voters. As a result, they all provided potential solutions to the problem of unaffordability in the Great White North. The proposals included a ban on blind auctions, investments in more procurement, and tax incentives for developers.
But one solution seemed to generate the most support between the parties: to master purchase abroad.
Canadian real estate news: Foreign buyer bars certainty based on election promises
Both Liberals and Conservatives have supported a ban on non-resident buyers. The NDP recommended the introduction of a 20 percent foreign buyer tax, similar to the 15 percent levy in British Columbia and Ontario. Now that the Liberals have been re-elected, there is renewed interest in what Trudeau plans to do on the housing front.
During the election campaign, Trudeau promised a two-year restriction on foreign buyers to fight housing affordability. The Prime Minister also wishes extend a tax on vacant dwellings owned by foreigners.
âYou shouldn’t lose a bidding war on your home to speculators. It is time for things to change. No more foreign wealth parked in homes where people should be living, âthe Liberal leader told a crowd of supporters in Hamilton, Ont. âIt’s not right that the communities you grew up in aren’t in places where you can build a life, raise a family, or grow old. This is because the game is stacked against you.
It remains to be seen whether Trudeau and the Liberals can move forward with this election promise in the next legislative session. But many Canadians agree that something must be done to rebalance the national real estate market.
What is the size of Canada’s foreign market?
Do foreign buyers control a significant percentage of the Canadian real estate market? According to a Statistics Canada Study 2017, which is the most recent measure, non-residents owned 3.4% of all homes in Toronto and 4.8% of residential properties in Vancouver. But while these numbers may seem negligible, they can actually be significant, considering how tight supply is in today’s environment.
Some experts warn that there could be negative reactions to the ban on foreign homebuyers. Many Americans buy and own property in Canada, and the restrictions could result in retaliation from the United States with financial sanctions.
“Can you imagine all the snowbirds that have places in Florida, Arizona, Las Vegas and all of a sudden they have to start paying extra tax?” If the Biden administration or the governor of Florida says, “Well, are Canadians going to do this to our people who own fishing lodges in New Brunswick?” Okay, we’ll impose a one percent tax on any Canadian who owns a home in Orlando, âsaid Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute, recently in an interview with BNN Bloomberg. âGlobally, we are often the foreign buyers and I don’t think Canadians would be very happy if we were given a taste of our own medicine.
A national housing strategy is needed
A recent RE / MAX Canada poll found that almost half (43%) of Canadians believe a national housing strategy could be one of the best mechanisms to address the country’s affordability crisis. Another RE / MAX Canada report found that 42 percent conceded that the high cost of housing kept them from entering the housing market, and 48 percent were concerned about their ability to afford a home in the two years. coming years.
Meanwhile, a separate Angus Reid poll, conducted last spring, found that about 60 percent of Generation Y Canadians felt “unhappy” about their housing situation. An RBC study completed earlier this year found that more than a third of adults between the ages of 18 and 40 say they will never be able to save enough to buy a home, and 62 percent believe they will be excluded from the market housing over the next ten years.
Benjamin Reitzes, Rate and Macro Strategist at BMO Capital Markets, said Bloomberg that “there is no short term solution,” adding that “it is a long term problem. They are not going to fix it in a year or with just one policy.
Whether or not a potential national housing strategy hits foreign buyers, it is clear that a multi-faceted approach is needed to help boost supply in order to alleviate unusually tight markets from coast to coast.