Over the last two years, home prices in Canada have increased by more than 50%.
In an effort to cool off a soaring real estate market, Canada would prohibit Nigerians and other foreigners from purchasing properties for two years.
This restriction would not apply to international students, foreign workers, or permanent residents of Canada.
According to Bloomberg, the measures will be included in Finance Minister Chrystia Freeland’s budget, which will be released on Thursday.
What you need to know
Over the last two years, home prices in Canada have increased by more than 50%. In February, the market saw a monthly increase that set a new high as purchasers acted ahead of the Bank of Canada’s rate hikes, driving up the benchmark price of a 30-year fixed-rate mortgage.
Over the last two years, home prices in Canada have increased by more than 50%. In February, the market saw a record monthly increase as purchasers responded ahead of the Bank of Canada raising interest rates, bringing the benchmark price of a home to C$869,300 ($693,000).
Justin Trudeau’s party also proposed a ban on “blind bidding” for homes during last year’s election campaign, which is the current practice of keeping proposals disguised while someone is auctioning a home.
Blind bidding has been accused of hastening price increases, with homes often selling for hundreds of thousands of dollars more than the asking price. Secret bidding, according to some, motivates potential purchasers to make the best offer they can.
The country’s trade group for real estate agents has now withdrawn its support for the practice.
The Canadian Real Estate Association announced a trial program on Wednesday that will display real-time offers on properties listed on Realtor.ca, the association’s own listing website.
What they have to say
The move shows that Prime Minister Justin Trudeau is becoming more proactive in his management of one of the world’s most costly real estate markets.
In addition, his government is becoming increasingly anxious about the electoral consequences of soaring property prices and inflation.
Students, foreign workers, and foreign citizens who are permanent residents of Canada will be exempt from the foreign-buyer prohibition, according to the source.
“I don’t think prices will decline as a result,” says Simeon Papailias, founder of real estate investment firm REC Canada. “However, I do believe it will remove at least part of the competitiveness in what is already the most competitive market in Canadian housing history.” “I don’t think a two-year band-aid will make a difference in what is a fundamental supply shortage.”
A large portion of Freeland’s budget will go into affordable housing and helping local governments improve their procedures so that new homes can be built swiftly.
However, the government is considering additional steps to assist first-time house purchasers, presumably in order to increase demand. According to the individual, Freeland would submit legislation that would allow Canadians under the age of 40 to save up to C$40,000 ($31,900) for a home downpayment in a new tax-exempt vehicle.
