In an effort to cool the red-hot housing market, Prime Minister Justin Trudeau has vowed to implement a 2-year ban on real estate purchases by foreign nationals, as well as make it easier for first-time Canadian homebuyers to purchase a home through grants and loans.
Although the number of properties changing hands has cooled in recent months, prices remain at historically elevated levels, causing frustration among first-time homebuyers. According to recent data from the Canadian Real Estate Association, the average price of a home in Canada has risen 16% from July 2020, to $669,200. Soaring home prices have become a central issue throughout the federal election campaign, with all three major political parties vowing to implement some form of new regulations.
Vancouver in particular, has become a real estate hotspot for non-Canadian homebuyers from Hong Kong and China, “You shouldn’t lose a bidding war on your home to speculators,” Trudeau said during one of his campaign stops. “No more foreign wealth being parked in homes that people should be living in.”
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The Liberal Party is also proposing to earmark $1 billion in loans and grants to help develop rent-to-own projects, a tax-free savings account for first-time homebuyers, as well as allocate $4 billion to help large cities construct 100,000 middle-class homes by 2025. In addition, Trudeau has also proposed a ban on blind bidding, as well as implement added regulations in the real estate industry to address money laundering.
The Conservative Party has revealed a similar plan during the election campaign, also promising to ban foreign home ownership for at least two years, as well as overhaul 15% of all federal buildings into affordable housing. The New Democratic Party has proposed to introduce a 20% tax non-Canadians purchasing property in the country, as well as bring back the 30-year mortgage.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
