Canada Proposes A Restriction On Foreign Buyers Purchasing Real Estate In The Country

Justin Trudeau has committed to reduce the country's skyrocketing housing costs.

Justin Trudeau, Canada's prime minister, has proposed a two-year restriction on some foreigners buying properties.

The move comes as the country grapples with some of the world's most severe home affordability problems.

Prices have risen by more than 20%, bringing the average Canadian home to about C$817,000 ($650,000; £495,000) - roughly nine times the average household income.

However, industry experts say it's unclear whether a prohibition on foreign purchasers will solve the problem.

Although data on overseas purchases in Canada is sparse, research suggests that they make up a modest portion of the market.

"I don't believe it will have a significant impact," said Ben Myers, president of Toronto-based consultancy firm Bullpenn Research & Consulting, who determined that foreigners accounted for just 1% of purchases in 2020, down from 9% in 2015 and 2016.

"It's a rather small amount, and let's face it, the individuals who truly want to buy... will find other methods to do it."

Mr Myers explained that rising housing costs are a result of significant population growth and a supply shortfall, which is exacerbated by restrictions that limit development.

Since the epidemic hit in 2020, when officials in Canada and elsewhere reduced interest rates to stabilize the economy, decreasing borrowing costs and raising demand even more, the problems have gotten worse.

According to OECD data, the moves have fueled surging property prices in numerous markets throughout the world, but the divergence between home prices and wages in Canada is one of the most significant.