In Canada, real estate prices are soaring, the value of houses is reaching peaks almost everywhere in Vancouver or Toronto. And Montreal, once spared, is also beginning to experience overheating. So in an attempt to lower prices, the Trudeau government is planning a drastic measure in its latest budget by prohibiting foreign investors from buying property in Canada.
From our correspondent in MontrealAlexis Gacon
What is planned by Ottawa is to prohibit foreign companies and individuals who are not citizens or permanent residents from acquiring residential property for a period of two years. There is an asterisk, however: if the foreign buyer obtains a job or immigrates to Canada within the next two years, then the purchase would be possible. This measure was in Justin Trudeau’s program during the last legislative campaign and follows his desire to also impose a tax on vacant housing.
There are also already taxes in several provinces in Canada that foreign investors who buy real estate properties pay more. Moreover, in Ontario, the tax has just gone from 15 to 20%. The government says it’s to curb speculation, to deter foreign investors who speculate in the overheated real estate market.
Exorbitant prices
In several cities in Quebec, the housing vacancy rate is below 1%, many elsewhere in the Montreal area. There are very few offers and a lot of requests, and therefore prices are exploding all over the country.
The average price of a house in Vancouver is 2.2 million Canadian dollars, approximately 1.6 million euros. In Toronto, we are at 1.33 million Canadian dollars. And nationally, the average property price hovers around $800,000. This is half more than in December 2019.
The government invests in real estate
The purchase ban for foreigners is not the only measure in sight to try to calm the real estate market a little bit. In the last budget, the government plans to inject 4 billion Canadian dollars to create 10,000 housing units and 6,000 affordable housing units over two years.
It also tries to curb what are called “flips”, that is to say the very rapid resale of properties at higher prices, especially after renovation, for example. With Ottawa’s measures, any quick resale of a property acquired in the last year will be considered a hasty resale. And therefore, the profits of this resale would be taxed more.
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