Canada blocks foreign buyers for two years

Canada has imposed a two-year ban on most overseas property purchases in a bid to calm a market that has left buyers desperate as to whether they could ever step onto the market ladder. lodging.

The ban and other actions taken by Prime Minister Justin Trudeau’s government last week highlighted the huge price increases in the Canadian real estate market, where prices have soared more than 50% in the past two years only.

The government announced a ban on buying a home abroad and higher taxes for people who sell their homes within the year, although both measures provide exceptions, including for permanent residents and foreign nationals. foreign students.

Home prices have jumped more than 50% in the past two years and the housing market posted a record monthly gain in February as buyers acted ahead of Bank of Canada rate hikes, pushing the price of reference of a house at the equivalent of US$693,000. , according to Bloomberg.

Would-be homeowners in Canada have long been exasperated by the country’s home buying rules, including the practice of “blind auctions” where bids are kept secret when someone sells a home.

Some believe that secret auctions force every potential buyer to bid as much as they can, and this practice has been accused of accelerating price gains.

Properties often sell for hundreds of thousands of dollars above the asking price.

“The bidding war is crazy,” said Ritika, a first-time home buyer who goes by one name. “You’ll see a house listed for CA$500,000 ($395,875) and you’ll bid CA$800,000 thinking you’ll easily do that.

“But suddenly an unknown investor with deep pockets is going to jump in and buy it for $1 million.”

Ritika, who moved from Dubai to Canada last year, says the government needs to regulate the market and take control of the situation.

“Agents don’t disclose other offers and leave you disgusted and waiting desperately,” she said. The National.

The moratorium on foreign buyers indicates that Mr. Trudeau is increasingly assertive to tame one of the most expensive housing markets in the developed world, and that the government is increasingly concerned about the political backlash of the inflation and rising housing costs.

Ajay Sharma, a Toronto sales representative with Royal LePage, one of Canada’s oldest real estate companies, said the government was under immense pressure to cool the real estate market, which he described as having followed a “trajectory reckless”.

“Recent decisions are more of an exercise in damage control by the Canadian government,” Sharma said. The National.

Ajay Sharma, sales representative at Royal LePage, said a huge gap between supply and demand has pushed prices beyond the reach of many Canadians.

“They seem more inclined to please voters and win their trust and their votes.

“They will not yield any long-term benefits as currently the real estate market is struggling with lack of inventory and a severe shortage of supply.”

Gagandeep Singh Soodan, another first-time home buyer, considers himself lucky to have secured a home of his choice after repeated offers.

Soodan described buying a property as a “frustrating” experience for many first-time home buyers in Canada.

The government should be “more proactive in safeguarding the interests of genuine homebuyers and it would be great to see tougher measures in the coming months”, said Mr Soodan, who works with a global digital consultancy, said The National.

Many homeowners have seen their property prices more than triple in the past three to four years.

For example, an 1,850 square foot townhouse in the community of Waterloo, which was priced between C$250,000 and 300,000 in 2018, has sold for over C$850,000 in recent months. .

Rents have also skyrocketed.

“I’m paying $2,300 a month as rent for a nearly 2,000 square foot townhouse…the same thing was available for $1,000 to $1,200 a month in 2020,” said Tim Langer, a software engineer who moved from California to Waterloo last year.

“If you move closer to Toronto in cities like Milton, Brampton and Mississauga, the rental market is even worse.”

But a resident of Chatham, Ont., noted that overseas buyers only account for a small percentage of sales.

“The restriction on foreign buyers will have no impact on the housing market and prices,” the former official said, speaking on condition of anonymity.

“Home prices in Canada are very reasonable when compared to those in other developed countries, and in most cases homes here are cheaper than in other developed countries.”

Updated: April 12, 2022, 03:19

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