The Canadian government enacted this law as home prices skyrocketed following the outbreak of the pandemic, and some politicians believed that buyers were to blame for snatching up the supply of homes as investments
According to CNN Business, Canada’s ban on foreigners purchasing residential properties went into effect on Sunday, following a surge in home prices since the pandemic began.
The Canadian government enacted this law as home prices skyrocketed following the outbreak of the pandemic, and some politicians believed that buyers were to blame for snatching up the supply of homes as investments.
This past year, the campaign website of Australian Prime Minister Justin Trudeau’s party stated that the desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors. “This is causing a real problem of underutilised and vacant housing, rampant speculation, and skyrocketing prices. “Homes are for people, not investors,” says the campaign website.
According to CNN Business, an exception has been made in the law for non-citizen immigrants and permanent residents of Canada.
The sharp increase in home prices in 2020 and 2021, on the other hand, was already reversed by 2022, well before the law went into effect. According to the Canadian Real Estate Association, average Canadian home prices peaked just above USD 800,000 in February and have since fallen steadily, falling about 13% from that peak.
Canadian banks, like the United States and other countries that have raised interest rates, are also to blame for price increases.
The Canadian Real Estate Association’s (CREA) price index is still up 38% from the end of 2019, before the pandemic, but the group claims that inventory of homes for sale has returned to pre-pandemic levels, according to CNN Business.
The real estate association expressed concern about the law, even with the exemptions for people planning to relocate to Canada. The group stated in a statement that Canada has earned a reputation as a multicultural country.
“As currently proposed, the prohibition on non-Canadians purchasing residential property may harm our reputation as a welcoming nation,” the group said in a statement. “The potential benefits of the ban are likely to be modest.” According to CNN Business, CREA is also concerned that the ban will prompt retaliation by the US and Mexico, preventing Canadians from purchasing property in those countries, particularly retirees looking for winter homes away from the Canadian winter.
In addition, the group stated that they purchase vacation and residential properties in a variety of countries, particularly the United States.
CR Canadians are the largest foreign purchasers of American real estate, accounting for more than half of all purchases in Florida and Arizona, according to CREA.
“These provide Canadians with a place to spend the winter months and serve as a form of savings for Canadian retirees,” the organisation says. “We should expect Americans to respond in kind if Canada prohibits Americans from owning property in Canada,” CNN Business reports.
