Home prices in Canada have soared more than 50% over the past two years.
Canada will ban Nigerians and other foreigners from buying homes for two years as an attempt to cool off a skyrocketing real estate market.
This ban would not affect foreign students, foreign workers or foreign citizens who are permanent residents of Canada.
The measures will be contained in Finance Minister, Chrystia Freeland’s budget on Thursday, according to what a person familiar with the matter told Bloomberg.
What you should know
- Home prices in Canada have soared more than 50% over the past two years. The market saw a record monthly increase in February as buyers acted ahead of rate increases by the Bank of Canada, taking the benchmark price of a home to C$869,300 ($693,000).
- In last year’s election campaign, Justin Trudeau’s party also suggested a ban on “blind bidding” for properties, which is the current practice of keeping offers hidden when someone is auctioning a home.
- Blind bidding has been criticized for hastening price increases, with properties occasionally selling for hundreds of thousands of dollars more than the asking price. Some argue that secret bidding encourages potential buyers to make the best offer they can.
- The country’s real estate agents’ trade association has now withdrawn its support for the practice.
- On Wednesday, the Canadian Real Estate Association unveiled a pilot initiative to display real-time offers on properties posted on Realtor.ca, the association’s own listing website.
The move indicates that Prime Minister Justin Trudeau is getting more assertive about managing one of the most expensive property markets in the industrialized world.
Furthermore, his government is becoming more concerned about the electoral fallout from rising home costs and inflation.
According to the source, the foreign-buyer prohibition will not apply to students, foreign workers, or foreign citizens who are permanent residents of Canada.
“I don’t think prices are going to fall as a result, though I do think it takes away at least some of the competition in what is the most competitive market in Canadian housing history,” Simeon Papailias, founder of real estate investment firm REC Canada. “I don’t think a two-year band-aid is going to have an impact on what’s a fundamental lack of supply.”
Several billion dollars from Freeland’s budget will go toward affordable housing and assisting local governments upgrade their procedures so that new houses can be built quickly.
However, the government is planning additional measures to help new home buyers, ostensibly to boost demand. Freeland would introduce legislation that allows Canadians under the age of 40 to save as much as C$40,000 ($31,900) for a home downpayment within a new tax-exempt vehicle, the person said.
