Canada Is Banning Foreigners From Being Able To Buy Homes

Canada has announced it will be banning foreign investors from buying homes in the country in the hope it will cool the hot housing market.

The announcement came in the Canadian budget, which proposes a two-year ban on foreign home investment.

Finance Minister Chrystia Freeland wrote in the budget that 'buying a house is out of reach for far too many Canadians' and the government is prepared to do 'everything' it can 'to make the market fairer'.

REUTERS/Patrick Doyle

Canada also intends to bolster the first homebuyers scheme to help young Canadians purchase their first home.

The Canadian government is doubling the grant to $10,000, providing up to $1,500 in direct support and it applies to any home purchased after January 1 2022.

"On housing, I would like to offer one caution — there is no silver bullet which will immediately, once and forever, make every Canadian a homeowner in the neighbourhood where they want to live," the Finance Minister said.

The budget promises aim to make housing more affordable to Canadian residents, as offshore money has flowed into Canada over the last 30 years, resulting in skyrocketing housing prices.

The average price of a home rocketed past $800,000 in February this year, according to CBC, meaning many people have struggled to onto the property ladder.

While the Trudeau government's budget has high hopes for Canadians dreaming of owning their first home, data indicates that the dream may remain out of reach for many.

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Data on purchases by foreign buyers in Canada is limited, but BBC research suggests they actually only make up a small fraction of the market.

"I don't think it's going to have a huge impact," said Ben Myers, president of advisory firm Bullpenn Research And Consulting in Toronto.

Myers found foreigners accounted for just one per cent of purchases in 2020, down from nine percent in 2015 and 2016.

"It's a fairly low number and let's face it, the people that really want to buy ... are going to find alternative ways to do it," he said.

According to CBC, the 2022 Canadian federal budget has already been dubbed the 'housing budget' due to the sheer amount of spending being funnelled into home ownership schemes.

A third of all new spending in this budget — $10.1 billion (AUD $10.7 billion, £6.1 billion)— is directed at housing.