Canada’s temporary ban on foreign purchases of residential real estate sends the world a mixed message just as this country is ramping up immigration, but few B.C. experts expect it to have a major effect in this province.
Real eState
Experts say foreign-buyer ban won’t bite B.C. real estate prices
B.C.’s hot markets have already cooled due to rising interest rates and the foreign-buyers tax has already deterred a number of foreign purchases
The measure, which Prime Minister Justin Trudeau’s government campaigned on in the last election as a means to reduce competition in an environment of soaring property prices, came into effect Jan. 1 and is set to remain for two years.
Regulations enacting the ban prohibit people who aren’t citizens or permanent residents from buying residential real estate, defined as buildings with fewer than three units, such as semi-detached homes, or condominiums.
It also doesn’t include properties worth less than $500,000 or those that are outside of major cities or so-called “census agglomeration areas,” with a core population of at least 10,000 people.
Canadian property markets, however, have slowed and property prices fallen due to higher interest rates.
And in B.C., the provincial foreign-buyers tax, now set at 20 per cent, has already reduced foreign purchases.
“It’s obviously a negative message in already what’s a fairly soft market, but remember, we already had such a deterrent,” with the 20-per-cent tax, Dinani said.
From the B.C. Real Estate Association’s perspective, the share of foreign buyers in B.C.’s market had fallen to less than half a per cent in the last two years, “so taking that down to zero doesn’t mean a whole lot,” said Brendon Ogmundson, the organization’s chief economist.
“At least one year during the pandemic, (we) essentially shut off immigration and shut off foreign investment, and we had record home sales and prices,” Ogmundson said. “So, clearly this is not that important a segment of the market. The ban is more politics than economics.”
Relocation experts worry that the measure will make it harder for bigger companies to recruit talent, particularly senior executives who have choices for where they want to work.
His organization lobbied government for a blanket exemption for anyone with a valid permit to work in Canada, or for transactions related to purchasing property for employee relocation. In a news release issued Dec. 21, the Council said the federal regulations don’t measure up.
In B.C., however, most skilled temporary foreign workers coming to the province rent before deciding where they might buy, Dinani said.
“Could it prevent some people from moving here if they can’t buy? I think so,” Dinani said. “But I think (that) is a smaller percentage.”
“I guess we’ll find out over the next year if we hit our immigration targets and we’re not having much of a problem in attracting people to Canada,” Ogmundson said.
Andy Yan, director of the City Program at Simon Fraser University said measures such as Canada’s temporary ban aren’t new. New Zealand, Australia, Hong Kong and Singapore have already put similar restrictions in place.
“Really, again, this is all the fact that we have just finally woken up to the fact that Canadian residential real estate occupies a global marketplace,” Yan said.
And he added that by focusing on buyers, it still doesn’t get at the influence that foreign capital has had on B.C. markets in particular.
Real eState
Mortgage rule changes will help spark demand, but supply is ‘core’ issue: economist
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
The Canadian Press. All rights reserved.
Real eState
National housing market in ‘holding pattern’ as buyers patient for lower rates: CREA
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
The Canadian Press. All rights reserved.
Real eState
Two Quebec real estate brokers suspended for using fake bids to drive up prices
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
The Canadian Press. All rights reserved.
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