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Tomorrow’s federal budget will announce a two-year policy banning foreigners from buying homes, according to CTV News Ottawa chief Joyce Napier.
Houses forbidden to be purchased by foreigners include apartments, condominiums, detached houses and other types of houses.
At the same time, there are several categories of people outside the ban: permanent residents, foreign workers, students and so on are not included in the new measures. Foreigners who buy self-occupied homes (primary residence) in Canada will be exempted.
“the people who are banned from buying a house are those who buy a house but live in Canada in the future, leaving the house empty when the stock is low and people can’t afford it,” the report said. ”
According to government sources, the policy change will legislate to empower the government to formulate punitive measures and potential judicial powers to deal with non-compliance. Spending data on measures aimed at foreign buyers are not yet available.
Given the tight housing market, insufficient inventory and soaring prices, CTV News learned that Thursday’s budget will also include:
4 billion yuan is used to help the municipal authorities update the zoing and permit system to speed up the construction of residential real estate.
1 billion yuan for the construction of affordable housing units.
Provide 1.5 billion yuan in loans and funds for cooperative housing (co-op housing). It is not clear how many new homes will be built under these spending measures. “the government’s aim is to leave Canadian houses to Canadians,” government officials told CTV.
However, it is not clear how much share foreign buyers and investors really have in the Canadian market.
Last week, the Ontario government sparked criticism when it announced that it would increase the province’s non-resident speculation tax (Non-Resident Speculation Tax) from 15 per cent to 20 per cent and expand the scope of the tax from the “big golden horseshoe area” (Greater Golden Horseshoe).
Official data on foreign buyers are rare, with the most comprehensive data from Statistics Canada’s 2018 Canadian Housing Statistics Project (Canadian Housing Statistics Program), which reports that in Ontario, the country’s largest housing market, non-resident home ownership is only 2.2 per cent.
Federal Finance Minister Fang Huilan (Chrystia Freeland) will unveil the budget at 4 p.m. Thursday.
According to the Financial Post, a survey by Scotiabank found that 43 per cent of people are now shelving their home purchase plans, more than double the 20 per cent in 2020 and 10 per cent higher than last year’s 33 per cent.
The Canadian real estate market, which has been booming for years, seems to be showing signs of buyer fatigue. Young people stand out in particular.
More than half (56%) of Canadians between the ages of 18 and 34 said the current economic environment had hurt their finances, causing them to delay buying a house. 90% of people think that house prices will continue to rise in the next 12 months, and 62% are waiting for prices to come down before buying.
51% complained about the threat of raising interest rates, forcing them to shelve their plans to buy a house. However, 81% of people think that the impact of rising prices is greater than raising interest rates.
Although the city closure restrictions have been lifted and many wage earners have to return to the office, market factors continue to push buyers to leave the city. Last year, 29 per cent wanted to buy better homes at the same price, rising to 35 per cent this year; especially among the younger generation, 49 per cent were willing to move out of the city in search of better value for money. 39% of Ontario residents are considering moving out of the city, the highest rate in the country.
Over the past year, housing affordability across the country has declined at a record rate. Only 1990 was worse than it is now, according to RBC’s latest housing affordability index.
Robert Hogue, a senior economist at Imperial Bank, said the prospect of affordability is grim. “the rapid rise in house prices in the first few months of 2022 has raised the threshold for many home buyers to impossible levels,” he said in the report. ” The Bank of Canada’s interest rate hike this year will further push up housing costs.
RBC expects the central bank to raise interest rates by at least 150bp this year. “the worst burden levels in history could occur, putting buyers at risk,” Hogue wrote. “