Why has Canada banned foreigners from buying homes in the country?
2 min read
- Nadine Youssef
- BBC News, Toronto
credit, Getty Images
Canada’s largest cities, Toronto and Vancouver, are often featured as the world’s most expensive cities to live in.
A ban on the purchase of real estate by foreigners in the country has come into force in Canada. The two-year ban aims to ease the world’s most inaccessible real estate markets.
Starting Sunday, January 1, people who are not Canadians or permanent residents will be affected by this measure. A fine of C$10,000 (about R$40,000) is expected for those who violate it.
In late December, 11 days before the ban went into effect, the Canadian government announced some exceptions to the ban, including foreign students who have been in the country for at least five years, asylum seekers and people with temporary work permits.
For critics of the ban, its impact on the Canadian real estate market remains uncertain.
As of last summer in the country, in mid-2022, the median home price in Canada was C$777,200 (R$3.1 million) — more than 11 times the median annual household income after taxes.
Non-Canadian residents make up less than 6% of homeowners in Ontario and British Columbia – the provinces where housing prices are the highest in the country.
Housing Minister Ahmed Hussein said in a statement that the ban aims to discourage buyers from viewing homes as commodities. – and not a place to live and raise a family.
“Through this legislation, we are taking action to ensure Canadians own home, for the benefit of everyone who lives in this country,” Hussein said.
credit, Getty Images
Real estate prices in Canada have risen far more than household income in recent years
Although home prices in Canada will drop slightly in 2022, they’re still much higher than they were a decade ago: They were up 48% last year compared to 2013, when the median home price was $522,951. Canadian.
Meanwhile, Canadian median household income has lagged far behind home prices. The latest data shows that the median household income grew by 9.8% from 2015 to 2020.
These numbers place the Canadian housing market as one of the most inaccessible in the world, above New Zealand, the United States and the United Kingdom, according to an index computed by Statista that relates to housing prices and incomes (Brazil is not included in the index).
The median home price in two of Canada’s largest cities, Toronto and Vancouver, has crossed the $1 million Canadian mark, which often puts them on lists of the world’s most expensive cities to live in.
New Zealand passed legislation similar to Canada in 2018 banning foreign homebuyers. However, inflation-adjusted home prices have continued to rise since the ban took effect.
Other countries have adopted various measures to restrict real estate ownership in the hands of foreigners, such as imposing specific fees on buyers with this profile and designating areas where they cannot acquire real estate.
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