Canada Blocks Housing Purchases Amid Foreigners' 'Real Estate Sweep'...

Ban on Non-Resident Foreigners Buying Homes for 2 Years
"Ineffective" and "Damaging National Reputation" Criticisms Also Raised

From this year, foreigners in Canada will no longer be able to purchase real estate for investment purposes. However, exceptions are made for students, immigrants, and Canadian permanent residents when buying homes.

According to CNN and others on the 1st (local time), Canada will close its doors for two years starting this year to non-resident foreign investors, including overseas corporations and individuals, who wish to purchase homes. This policy came into effect on January 1st of this year under a special bill enacted by the House of Commons in June last year as a measure to alleviate the housing shortage.

"Rapid rise in housing prices due to real estate speculation by foreigners including China"

Justin Trudeau, Prime Minister of Canada. [Image source=Reuters Yonhap News]

Recently in Canada, as foreigners including those from China have been sweeping up homes on the market, public dissatisfaction has grown. Politicians have also viewed foreign speculation as a factor in the rise of Canadian housing prices since the COVID-19 pandemic, leading to the promotion of this bill.

Canadian housing prices are reported to have surged more than 50% over two years since 2020. According to the Canadian Real Estate Association (CREA) and others, the average home price in Canada reached $693,000 CAD (approximately 840 million KRW) as of last February.

Prime Minister Justin Trudeau stated last year, "Canadian housing is attracting profiteers, wealthy corporations, and foreign investors," adding, "This leads to real problems such as underutilized and vacant homes, rampant speculation, and soaring prices. Housing is for people, not investors."

This policy stipulates exceptions for immigrants and Canadian permanent residents, not citizens. Foreign workers with work permits, international students meeting certain criteria, refugees, diplomats, and international organization staff are included in the exceptions.

Foreign workers and students can purchase only one home under certain conditions. Workers must have at least three years of work experience within the four years prior to purchasing a home. Students must have stayed in Canada for at least 244 days each year for the five years prior to purchasing and cannot buy homes priced over $500,000 CAD (approximately 470 million KRW).

"Housing price surge due to low interest rates and supply shortage... Tarnishing the reputation of a multicultural country"

However, there are voices saying the impact of this policy will be limited. The fundamental causes of rising housing prices have been ultra-low interest rates and supply shortages. According to Statistics Canada, the proportion of home purchases by non-resident foreigners in the overall housing market is low, at 3-5%, and in the two major real estate markets, Vancouver and Toronto, foreign home purchases in 2020 accounted for only 6.2% and 4%, respectively. Due to the two-year implementation period, it is difficult to influence housing price stabilization, and there are criticisms that it will not be an effective measure to resolve the housing shortage.

CREA explained that since housing prices peaked in February, they have steadily declined by about 13% to date. They also reported that although the housing price index has risen 38% compared to the end of 2019 before the COVID-19 pandemic, the inventory of homes for sale has returned to pre-pandemic levels. CREA expressed concern, stating, "Canada has built a reputation as a multicultural country welcoming people from around the world. As currently proposed, banning non-Canadians from purchasing residential real estate could affect the country's reputation. The potential benefits of this ban will be minimal."

This content was produced with the assistance of AI translation services.