What happened? The Prime Minister of Canada has instructed the minister of housing to temporarily prohibit foreign buyers from buying real estate that is not intended for recreation. Earlier in August, Justin Trudeau promised to ban the purchase of housing by foreigners in general.
Quote. In a mandate letter sent to minister Ahmed Hussein, Trudeau called for a ban on foreign investors, saying it would soften the market situation and expand opportunities for local buyers.
"As the minister of housing, diversity, and Inclusion, your main goal is to help Canadians find their own home. So, we need to work on increasing housing affordability and eradicating chronic homelessness," Trudeau wrote.
At the moment, the supply of housing in Canada has reached a minimum level. The average cost of real estate in November reached a historic high, and experts believe that prices are inflated by almost half.
What else? In the letter, the Prime Minister also asked the minister of housing "to strengthen consumer protection and ensure transparency of real estate transactions, including the prohibition of blind bidding." Fierce bidding wars over limited housing stock were a hallmark of the Canadian real estate market last year. The federal government has promised to abolish the procedure of blind bidding as a means of reducing housing prices, although some experts have stated that in fact, it will have the opposite effect.
Trudeau also calls for the introduction of a tax preventing the resale of residential real estate, which will oblige owners to own the purchased property for at least 12 months to avoid paying tax.
Context. Trudeau's proposals came a day after the Canadian Real Estate Association reported that in November, the average cost of housing in the country is $557,670 and is projected to reach $571,890 in 2022.
Earlier this week, finance minister and deputy prime minister of Canada Chrystia Freeland said that "it will take years of sustained supply growth to solve the serious affordability problems that Canadians face."
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Source: Urbanized