High-net-worth individuals are discouraged from investing in the Canadian housing market
The federal government’s ban on foreign home buyers, which was intended to ensure greater housing access and supply for Canadians, is leading to considerable slowdown in the luxury home market in the absence of non-Canadian investors, according to Engel & Völkers Canada.
In particular, the ban that came into effect on January 1 this year is discouraging high-wealth individuals like athletes and executives from investing in the Canadian housing market.
Engel & Völkers Canada said that Toronto’s ultra-luxury properties valued between $10 and $20 million took only 40 days to sell in 2022, compared to a whopping 112 days in 2023.
This is despite some critical revisions to the policy in late March, which the Canada Mortgage and Housing Corporation (CMHC) said will “allow non-Canadians to purchase a residential property in certain circumstances.”
“Work permit holders are eligible if they have 183 days or more of validity remaining on their work permit or work authorization at time of purchase, and they have not purchased more than one residential property,” CMHC said at the time. “The current provisions on tax filings and previous work experience in Canada are being repealed.”
One of the most prominent new policies to impact Canada’s housing market this year has been a two-year ban on foreign non-resident buyers..https://t.co/WJHXmmFS0L
— Canadian Mortgage Professional Magazine (@CMPmagazine) March 2, 2023
Foreign buyer ban “distorting” the luxury market
Larry Mohr, chief operating officer and license partner of Engel & Völkers Ottawa Central, said that the company has previously suggested a cap on the ban so that ultra-high-value properties are not affected.
“The purpose of the policy was to free up housing for affordable housing for low-income families,” Mohr told the Financial Post. “No low-income family is going to be impacted by a $2-million sale in Toronto or a $2-million sale in Ottawa. No low-income families are in the market for that property. So, you’re really distorting the luxury end of the market when there’s really no need to do that.”
