(TheRealDeal) – Canada, one of the world’s most expensive housing markets, is cracking down on foreign buyers.
Finance Minister Chrystia Freeland’s budget, proposed this week, includes a measure that would ban most foreigners from buying homes for two years, Bloomberg reported. The move underscores efforts by Prime Minister Justin Trudeau to bring the market under control after home prices jumped by more than 50 percent in two years.
“I don’t think prices are going to fall as a result, though I do think it takes away at least some of the competition in what is the most competitive market in Canadian housing history,” Simeon Papailias, founder of real estate investment firm REC Canada told Bloomberg. “I don’t think a two-year band-aid is going to have an impact on what’s a fundamental lack of supply.”
- Return of price cuts suggests U.S. housing market is starting to cool
- Another 50,000 U.S. retail stores will close by 2026, analysts predict
- A one-bedroom treehouse is New York’s most popular AirBnb
Freeland’s budget also calls for several billion dollars of funding to build affordable housing and to help local governments build homes faster.
The budget also includes legislation that will help young Canadians save money for home down payments. The proposed measure would allow those under the age of 40 to save up to CA$40,000 (US$31,900) in a new tax-exempt vehicle.
The ban won’t apply to students, foreign workers or foreign citizens who are permanent residents of Canada.
During last year’s election, Trudeau proposed a ban on another practice that many say pushes up prices: Blind bidding, which is commonplace in Canada, keeps offers on a home secret when it’s being auctioned. Some say it amounts to a way for sellers to drive up prices because bidders feel compelled to offer as much as they can.