Although some experts suggest the impact on the housing crisis will be minimal, the federal government looks to be moving ahead with a ban on foreigners buying real estate in Canada. The move is part of a $10-billion housing plan that is included in the federal budget set to be tabled April 7.
There will also be a slew of new measures to help with the acceleration of housing supply to address affordability.
Although the plan is not yet announced, the ban is reportedly going to extend for two years.
Apparently, there will be a number of exemptions from the new rules including for permanent residents, students, and foreign workers. So, it’s hard to tell what a two-year ban will accomplish, but some experts suggest not much.
“Given the relatively limited share of foreign investors in the market as a whole this is not a game-changer, but will have an impact at the margins,” says Benjamin Tal, Deputy Chief Economist of CIBC World Markets Inc.
On social media, other housing experts such as Jennifer Keesmaat suggest that other domestic speculators in the market should also be taxed.
There is a confusion, or failure to distinguish between, foreign buyers + domestic investors. Gov’ts target foreign buyers, but domestic investors are given a free ride. Taxing revenue from housing investments as employment income would have an immediate cooling effect.
— Jennifer Keesmaat (@jen_keesmaat) April 7, 2022
Others contend the recent and ongoing interest rate increases are already cooling the market. The most recent market update for the Greater Toronto Area does suggest some easing of the very tight market conditions, but the average selling price was still up by 18.5 per cent year-over-year. Currently, the average price for a home in Toronto sits at $1,218,546 up from $1,082,896 last year.
Tal suggests that the condominium market will be impacted by the move more than any other sector of the housing market, especially in larger urban areas.
“In some cities such as Vancouver the impact will be more significant,” Tal says. “By category, the impact will be felt more in the condo space. So not a trivial move, it will ease some pressure but not a game-changer.”