South forest hill residences.Will house prices plummet? In an effort to make housing more affordable, the Canadian Federation recently announced a two-year ban on foreign buyers in its 2022 budget, which undoubtedly had a huge impact on the real estate market.Please Visit: South forest hill residences to Get Your VVIP Registration Today!
Although the details have not yet been fully released, is this a pros and cons? Can it really help people afford housing? How will the situation of foreign buyers in the market develop?
According to the Canadian Real Estate Association, house prices rose by more than 51 per cent in the two years to February, with the benchmark average price reaching 868400. Among the many parliamentary proposals to help residents afford housing, a two-year ban on foreigners and non-Canadian companies from buying property in Canada is particularly prominent.
In recent years, the idea that foreign money has pushed up house prices in Vancouver and Toronto has become a political issue of great concern.
In 2016, British Columbia levied a 15 per cent tax on foreign buyers buying homes; at the end of last month, Ontario also raised the tax rate to 20 per cent, which was introduced throughout the province.
However, some economists say that in fact, in Vancouver and Toronto, foreign buyers do not have as much impact on house prices as people think. Once the home purchase ban is implemented, it may bring more headaches.
Somerville, a professor at the Suntech School of Business at the University of British Columbia, said the rise in house prices during the outbreak ran counter to the assumptions behind the ban.
In the past two years, it has been difficult for foreign buyers to enter the local property market because they are unable to enter the country, which has seen the biggest increase in house prices in the past decade. At the same time, research shows that since the introduction of a foreign buyer tax in British Columbia, prices in Vancouver’s popular neighborhoods have fallen by only 3% to 5% compared with other neighborhoods.
Professor Gordon of Simon Fraser University believes that even if the demand of foreign buyers makes it impossible for people in the Vancouver and Toronto areas to afford to buy houses, many properties in these cities are mostly purchased by local residents on behalf of their overseas relatives or friends, so this phenomenon cannot be solved simply by banning the sale of houses to foreign buyers.
The core of the problem in the real estate market is not citizenship, but the source of funds for the purchase of real estate. So no matter what form the new ban takes, it cannot completely put an end to such transactions.
At present, there are few detailed rules for the implementation of the house purchase ban. The finance department said that properties used for entertainment and leisure purposes would be exempted, but the specific category had not yet been defined, while permanent residents of Canada and holders of student and work visas were exempted from the definition of the category of foreign buyers.
Since the real estate market is controlled by the provinces, it is not clear how the federal government will manage it. Legal experts believe that the federal government may exercise its power to write the regulation into criminal law, but doing so will result in discrimination on the basis of nationality and conflict with the Canadian Charter of Rights and Freedoms.