Canada is trying to cool down the real estate market: today the ban on selling apartments to foreigners in the country came into effect, and it will be in effect for two years.
Canada follows New Zealand, which took similar steps in 2018, when 2.9% of home buyers were foreign residents, a figure that shrunk following the ban to only 0.4%; However, despite the ban, apartment prices in the country continued to soar.
Real estate experts are not convinced that the new ban in Canada will have much of an impact, as students and migrant workers will be exempt from it.
In British Columbia, foreign buyers were involved in only about 1.1% of transactions in 2021. Brandon Ogmundson, Chief Economist at the Real Estate Association of British Columbia, said that in his opinion this is more a political policy than an economic policy: “In recent years, many believe that foreign investors and foreign money are driving up apartment prices, but in reality this is caused by low interest rates and very little supply.”
A spokesman for the Canadian government said: “The apartments should be homes for Canadians and not investments by foreigners.”
Robert Kavcic, senior economist at the Bank of Montreal, added that the ban will have “a minimal effect on the ground, especially today, when much more significant factors such as interest rates and market psychology dictate real estate activity and prices.”
International students and foreign workers who have lived in Canada for a certain number of years and intend to become permanent residents will be allowed to purchase one property. The rules only apply to residential properties with 3 housing units or less.