Canada’s soaring housing market has left some domestic buyers priced out, leading the country’s prime minister to make a radical pledge on the campaign trail: a temporary ban on foreign home buyers.
Justin Trudeau, the Liberal Party head who is running for re-election, proposed the two-year ban as a means to boost housing affordability for Canadians.
“You shouldn’t lose a bidding war on your home to speculators. It’s time for things to change,” Trudeau said at a campaign event in Hamilton, Ontario, according to Bloomberg. “No more foreign wealth being parked in homes that people should be living in.”
Non-resident buyers from China and Hong Kong have been active in the market, particularly in Vancouver, and the average cost of a home in Canada in July was $529,840, up 16 percent year-over-year.
Additionally, Trudeau’s Liberal Party is proposing a ban on blind bidding, calling for tax-free savings accounts for first-time buyers and requesting more oversight of the real estate industry to combat money laundering.
Trudeau certainly isn’t alone in calling out foreign buyers from the bully pulpit. Erin O’Toole, leader of the Conservatives, is also proposing a ban on foreign home buyers for at least two years, as well as the refurbishing of 15 percent of federal buildings for housing.
The New Democratic Party, Canada’s third major political party. doesn’t call for a ban on foreign buyers, but is proposing a 20 percent tax on homes bought by foreigners or non-permanent residents.
According to Reuters, support for Liberals in the polls is slipping, down to just 33 percent in the most recent poll. The election is set for September 20.
Many other major housing markets, including New York, have grappled with the issue of absentee foreign buyers. The New York real estate industry has perennially battled calls for a pied-à-terre tax, warning that it would hobble the city’s housing market and hurt overall tax revenues.[Bloomberg] — Holden Walter-Warner