Canada’s housing market is facing a crisis. The problems facing a sector that gives a majority of Canadians a headache were laid bare in the federal budget presented in the lower house on April 7. The government of Justin Trudeau has introduced certain measures to tackle the issue, such as preventing foreigners from buying property for a period of two years.
According to the Canadian Real Estate Association (CREA), the average price of a home in Canada in February stood at $816,720 Canadian dollars (€598,000). CREA, which has a membership of around 130,000 real estate agents, that figure is 20.6% higher than in the same month in 2021. The national average cost of a home is reduced by $178,000 outside of Vancouver and Toronto, the two most active and most expensive real estate markets in the country.
That average rose by 44% in Canada between December 2019 and February 2022. Assistant Professor in Urban Planning at the University of Montréal, Jean-Philippe Meloche, says that this increase was already in evidence before Covid-19, but the pandemic brought the issue to the fore. “A lot of Canadians were carrying out renovations. At the same time, the construction sector was in need of manpower and materials that were not readily available. And a lot of people also bought properties outside the main urban centers. This exacerbated the problem.”
The Canadian government’s budget includes some $4 billion for the construction of at least 100,000 new homes over the next five years, double tax incentives for first-time buyers and monthly subsidies for people who are unable to find affordable rent. Taxes will also be raised on flipping: the sale of properties for profit after less than one year of ownership.
Finance Minister Chrystia Freeland said when presenting the budget: “Our economy is built by people, and people need homes in which to live. Our problem is simply this: Canada does not have enough homes. We need more of them, fast.” Also included in the budget is a ban on non-Canadians – and non-Canadian-held companies – from making property investment over the next 24 months. Exemptions will be put in place for permanent residents, asylum seekers and those holding work or study permits.
New Zealand introduced similar measures in August 2018. Similarly, foreigners are prevented from acquiring property in the Åland Islands in Finland. The debate about the presence of foreign buyers in the Canadian real estate market is not new: the provinces of British Columbia and Ontario already have a 20% tax rate in place for such purchases. However, the federal government has now gone further and proposed a ban on foreign property purchases on a national scale.
The issue has been divisive, with some saying it is a step in the right direction as part of a package of incentives designed to tackle the housing crisis. Nicola St. John of Bosley Real Estate told CTV News that non-residents often make elevated offers for properties, skewing the market for Canadian buyers.
“A more political than practical initiative”
However, there are also dissenting voices around the government’s plan. One sticking point is that the exact requirements for exemptions have not been clearly defined, which opponents fear could pave the way for loopholes to exploit. Even so, the biggest argument against the proposal is based on its actual impact: “There aren’t really enough foreign buyers to make it likely that this will have a significant effect. To me it seems a more political than practical initiative,” says Meloche.
Tsur Somerville, a professor at the Sauder School of Business at the University of British Columbia (UBC) and director of the UBC Centre for Urban Economics and Real Estate, tells EL PAÍS: “The presence of foreign buyers has diminished, although they have never represented a serious problem. At the same time, prices have gone up. This ban is not going to be a game-changer.” A report published by Baker Insights Group shows that non-Canadian residents purchased just 1% of all the properties sold in 2020. A year after New Zealand imposed its property prohibition in 2018, the average price of a home rose by 12%; in 2020 and 2021, the increase was 18% and 23%, respectively.
Canada’s House of Commons will vote on the budget before long. A ban on foreign property purchases was an election promise made by Trudeau’s Liberal Party during last September’s elections. The opposition Conservatives made the same campaign pledge while the New Democratic Party, with whom the Liberals forged a political alliance, proposed a 20% tax rate at national level.
“The taxes had an impact, albeit a tenuous and short-lived one. Furthermore, foreigners tend to look in specific areas and don’t buy up any old property,” says Meloche. Somerville concurs: “We have already seen these taxes in cities where this is a lot of interest, such as Vancouver and Toronto. They had little effect. The housing crisis is, overall, an issue linked to domestic factors, although it is easier to point the finger elsewhere instead of at ourselves.”
Somerville conducted a joint study with Andrey Pavlov, a professor of finance at Simon Fraser University’s Beedie School of Business. The document shows that after British Columbia imposed the property tax, house prices fell by just 3% to 5% in Vancouver in those areas preferred by foreign buyers. According to real estate agency Re/Max Canada, there were practically no home purchases by non-Canadian residents in the north and east of Vancouver in the first five months of 2021, but 60 properties worth a minimum of $5 million were sold in those areas.
Steve Lafleur, an analyst at the Fraser Institute public policy think tank, wrote in a communiqué that the Liberal government, rather than looking to weed out these supposed “bad” buyers, should instead focus on construction and reducing the red tape that hampers the sector. Canada’s National Housing Council has recommended investment in the sector of $6.3 billion as opposed to the $4 billion set aside in the budget. The Canadian Home Builders’ Association says it is a step in the right direction that the Trudeau administration has acknowledged the dimension of the housing crisis, but has expressed dissatisfaction that the budget contains “few concrete measures” for sectors of society with limited purchasing power.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
