In an attempt to tackle housing affordability (and win over frustrated millennials... again) Justin Trudeau announced a plan to implement a two-year pause on non-resident foreign homebuyers in Canada if he’s re-elected.
“You shouldn’t lose a bidding war on your home to speculators. It’s time for things to change,” Trudeau said at a campaign event in Hamilton earlier this week. “No more foreign wealth being parked in homes that people should be living in.”
Increasingly, fingers are being pointed at foreign buyers as a driving force for surging housing costs, especially in cities like Vancouver and Toronto. Critics say the Liberal government has facilitated a climate that allowed foreign offshore investment on the real estate front to thrive at the expense of would-be Canadian homebuyers.
Many foreign investors have made their wealth in places where incomes are higher and taxes are notably lower, giving them an undeniable advantage over tax-paying first-time homebuyers in Canada, where home prices and wages remain out of whack. As a result, speculation is directly widening the gap between renters and buyers by inflating home prices.
The bottom line is that most Canadians -- especially first-time homebuyers (in theory, that is) -- can’t compete with foreign investors when it comes to real estate. This is something most people and political parties can agree on.
And, of course, given Canada’s concerning climate of sky-high and increasingly unattainable housing costs, housing is front and centre for each major candidate vying to become Canada’s next Prime Minister.
Conservative candidate Erin O’Toole announced a similar plan with respect to foreign speculators last week. Like Trudeau, the Conservatives would ban home-buying for foreign investors residing outside of Canada for at least two years. The party also pledged to refurbish and transform 15% of federal buildings into housing options.
Meanwhile, the NDP party plans to crack down on foreign investors by the way of a 20% tax on homes purchased by buyers who aren’t Canadian citizens or permanent residents.
In addition to the two-year pause on foreign homebuyers, the Liberals’ plan also includes the introduction of tax-free savings accounts for foreign buyers, a ban on blind bidding, the addition of 1.4 million homes over the next four years, a Homebuyers' Bill of Rights, and heightened action in the real estate industry to fight money laundering.
Nanos nightly tracking put the Liberals slightly ahead of the Conservatives by about three percentage points.
Canadians will head to the polls on September 20.
