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But COVID-19 ‘s hangover, soaring real estate prices, has become the hottest topic in Canada. The surge in real estate prices is particularly prominent in the federal budget that Canadian Finance Minister and Deputy Prime Minister Freeland transferred to Parliament on Thursday.
Canadian society generally believes that high house prices in places such as Vancouver and Toronto are caused by overseas sellers hyping local properties.
In 2016, British Columbia imposed a 15% tax on houses and apartments bought by foreign buyers. At the end of last month, Ontario raised its tax rate to 20% and extended it to the entire province.
But several economists interviewed after the budget release said that even in Vancouver and Toronto, foreign buyers did not have as much impact on house prices as many might think. Some experts warn that the ban is likely to cause or even cause Canada’s own headaches.
Tsur Somerville is an associate professor at the Sauder School of Business at the University of British Columbia, specializing in real estate economics. He said that the actual rise in housing prices during the outbreak contradicted the assumptions behind the ban.
“in the past two years, it has been very difficult to become a foreign buyer of real estate in Canada because entry restrictions caused by the epidemic have made it impossible for overseas buyers to enter Canada,” he said. ” However, this is when house prices have risen the most in the past decade. ”
After the 2016 British Columbia tax, prices in Vancouver’s communities popular with foreign buyers fell by only 3 to 5 per cent compared with those avoided by those buyers, according to research by Prof Somerville and a colleague.
In a paper published in 2020, Joshua C-Gordon, an adjunct professor at the Simon-Fraser University School of Public Policy in Bennaby, British Columbia, found that demand from people outside Canada did drive down housing prices in Vancouver and Toronto, but not by a budgetary sales ban.
‘a lot of real estate purchases in these cities are made by Canadian residents or citizens on behalf of relatives or others living overseas, who provide the money behind the deal,’he wrote. No matter what form the new ban takes, it will not prevent such a deal.
“what matters is not citizenship, but the source of funding for the purchase of real estate,” Gordon wrote.
The Treasury will provide the budget for the bill in the coming months, provide a deeper definition of entertainment properties that enjoy exemptions, and how to regulate people who are granted permanent residency in Canada on student visas. and people who live here temporarily for work.