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The measures are part of the 2022 budget implementation bill Cmur19, which was approved by the royal family on June 23 as the federal government wants to cool the red-hot real estate market.
Chrystia Freeland, the finance minister, said foreigners needed to be banned from owning homes to curb house prices in Canada and prevent them from rising to the point of driving working-class and young Canadians out of the property market.
“We will make the market fairer to Canadians,” Freeland said. “We will prevent foreign investors from depositing money in Canada by buying houses. We will ensure that houses are used as homes for Canadian families, not as speculative financial asset classes. ”
If you buy or sell a property in the near future, you should be rational, pay attention to market trends, and consult residential and commercial real estate experts– to reduce risks and increase returns.
Canada plans to double the number of homes to drive down prices.
Before Canada’s housing stock sees a sharp rise in start-up, Ottawa wants to curb foreign investment to reduce its inflation rate.
“for years, foreign money has been pouring into Canada to buy residential real estate, raising concerns about the cost impact of cities such as Vancouver and Toronto, as well as concerns about Canadians being squeezed out by high prices in the national urban real estate market.”
“to ensure that homes are owned by Canadians and not foreign investors, the 2022 budget announced the government’s intention to introduce restrictions to prohibit foreign commercial enterprises and people who are not Canadian citizens or permanent residents from buying non-entertainment residential properties in Canada for a period of two years.”
Ironically, however, Ottawa is coming to control inflation in the Canadian real estate market by banning foreign investment, as analysts have predicted a downturn-some even a crash-in residential real estate across the country.
In recent years, various lending policies have been gradually tightened to effectively prevent borrowers from getting into trouble. Relevant data show that the credit scores of new mortgage applicants are generally high, which also reflects the recent continued high lending standards.
The slowdown was particularly severe in June in the regions with the strongest (and most expensive) markets during the pandemic, including Toronto and Vancouver.
Because of the rise in average house prices and the expansion of mortgages, these areas are more sensitive to early interest rate increases.
In Toronto, home sales fell 41% in June from a year earlier, while in Vancouver, home sales fell 35% over the same period.
Desjardins, a senior executive at Canadian financial institutions, also made a forecast warning that the real estate bubble would burst because of rising interest rates. One of his reports points out that Canadian house prices are likely to fall by 15% from February this year to the end of 2023.
