In its quest to control home prices, the Canadian government has implemented a drastic measure: It will ban home purchases by non-resident foreigners for the next two years.
It will do so by means of a law which entered into force on 1 January and which was approved by Justin Trudeau’s government in the face of rising house prices since the start of the pandemic, stimulated, according to the authorities, by the increase in foreign buyers who have acquired numerous properties as an investment.
As Trudeau has explained in recent months, there have been in the Canadian real estate market numerous speculative operations by multinationals and foreign investors which have generated a problem of lack of housing and skyrocketing prices.
“Homes are for people, not investors.‘ insisted the liberal Canadian president. Yes, refugees and permanent residents of Canada who use it as their primary residence will be able to buy homes.
The measure, one of Trudeau’s campaign promises in his latest campaign for the 2019 election, is being implemented despite home prices in Canada having dropped about 13% this year, according to the Canadian Association of Real Estate.
All this after the sharp rises after the pandemic and in recent months the Bank of Canada has raised interest rates. Last April, the Canadian government unveiled its draft budget for the 2022-2023 fiscal year focused on reducing the deficit and lowering the cost of housing in the country.
Of the C$31.2 billion (US$24.8 billion) of new spending, one-third is earmarked for making home ownership more affordable for Canadians.
Canada is not alone
Canada is not the only country to take steps to limit or lower house prices. Various states or cities around the world have already implemented formulas to lower prices in the real estate market.
One of the most recent was Government of the Netherlandswhich in December 2022 announced that it will impose rent limits on more than 300,000 homes starting in 2024. The goal of the measure is to provide affordable housing in the face of a shortage, a problem that has plagued the country for some time.
Once the measure enters into force, the rental price of the indicated houses will be reduced by an average of 190 euros per month, according to calculations by the Dutch government. Its housing minister, Hugo de Jonge, has indicated that prices will be indexed annually to inflation, so that the properties will have a maximum monthly rent of around 1,100 euros. Landlords who fail to meet the maximum rents could be fined.
Another of those who took steps in this regard was the city of berlin, which announced the purchase of 6,000 homes with the aim of expanding the stock of social housing and lowering prices. Subsequently, in 2020, he enacted a law to limit rental prices, a measure that was repealed by the German Constitutional Court, believing it encroached on state powers. The paralysis of the norm has provoked large demonstrations in the German capital.
Another of the European countries that has announced measures to contain the price of real estate rentals has been France. Its president, Emmanuel Macron, announced in 2020 a package of measures to end the problem of empty houses. The plan seeks to encourage homeowners to rent out these homes by contemplating, as a last resort, expropriation by banks or insurance companies in case emergency accommodation is needed.
