Should Canada restrict foreigners from buying its real estate?
I’ve been at this job here at MSN Money for a little more than three years, and I can recall quite clearly the patter of financial headlines back in early 2009, when I started.
What’d they say? They said that Toronto’s housing market, rising steep and steeper yet, was unsustainable. Get ready for the crash, folks, because it's coming soon.
But then … it didn’t come then, and hasn’t come yet. In between has been the same discourse, a similar kind of rationale you’d imagine applied to Apple stock the last few years, too: now this has got to be the peak. Buy now and lose your shirt.
Though what if a burst in Toronto’s housing market, as well as that other Canadian city where real estate prices are even higher, never comes?
That’s the assertion of the Financial Post’s Diane Francis, at least, who notes that in spite of hand-wringing from TV talking heads, columnists and Jim Flaherty, there is one reliable source in key Canadian markets that won’t allow them to collapse. There is, in effect, too much foreign money keeping – and lifting – real estate prices high.
*Bing: What is the average price of a home in Vancouver?
According to Bloomberg News, there are nearly three times more condo high-rises being built right now in Toronto than New York City, and nearly seven times more than in Chicago. Vancouver, too, is seeing the same boom propped up largely by foreign capital, turning its and Toronto’s crane-littered skylines in Dubai West nos. 1 and 2.
A perfect illustration lies here, Francis points, in the sale of a “modest” Toronto bungalow last month. The asking price, which is already nauseating, was $759,000, though a bidder swooped in and levelled the competition, dumping $1.18 million into the property. Simultaneously, this pissed off other buyers while also artificially propping up the home’s value, as well as what others in the neighbourhood might think their houses should now be worth.
That bidder? The Chinese parents of a university student, who have a business in the United States but live in China.
Here, the Kevin O’Leary in us wants to scream, “This is the market being the market! Let it work on its own!” But is that the best approach, given we’ve seen just how a housing bubble burst can affect an entire nation?
In summation of a complex argument, there is plenty of support behind initiatives that echo what countries like Australia, Thailand, Switzerland and, ironically, China do: restrict foreign buying. In Thailand, for instance, foreigners cannot buy land but can buy condos, though only up to 49 per cent of each building. Australians recently imposed a ban preventing foreign non-residents from buying homes or investment properties, and while temporary residents can buy, they have to sell when their residency ends.
Do you think Canada, in a bid to reign in real estate prices, should restrict foreign buyers? By contrast, is foreign capital a good thing for the country and should homes sell for the highest price they can fetch?
By Jason Buckland, MSN Money
Posted by: Robert Tremblay | Apr 16, 2021 11:53:25 PM
No... let the market decide. This influx of foreign money gets spent in Canada and creates money flows where there would be little to none.
Posted by: Prof S. Watts | Apr 17, 2021 4:01:28 AM
Wow! Of course “foreign” buyers and their capital are good for real estate development! An equivalent question may be, “Should any country or person put their head in the sand and allow ethnocentric or parochial views into management?” North America was primarily developed by immigrant “foreign buyers.” No one is better than any other. Markets should be allowed to operate openly. Plans and guidelines should be developed slowly over long periods. Beware of general statements such as “restricting foreign buyers.”
It may be better to ask about ways to develop the rural areas from within before limiting and thus deteriorating the urban areas further than current conditions.
FYI, countries you referenced are working on ways to open their markets.
Posted by: Oh Really !! | Apr 17, 2021 11:39:05 AM
We have lots of property they can buy... Kascheshwan is prime waterfront land. Many other FN "properties" are looking for investors. At least they'd be off the taxpayers' backs.
Posted by: Clear & Focused | Apr 18, 2021 4:46:19 AM
Welcome to 21st century serfdom. You all deserve everything that is coming to you.
Posted by: Troy Jollimore | Apr 18, 2021 9:31:19 AM
Totally hear that, 'Clear & Focused'...
With 'Billionaire' being the new 'Millionaire', millionaires are a dime a dozen. Regular housing prices and controls just don't affect these people, because they can buy their way around them. I make what I consider to be a good wage. It supposedly puts me in the top 1% of the World's population. But I can't afford to buy a house without enslaving myself for a good, long time... And this is after building up equity in my current residence and being VERY smart with money.
What do the 'rich' people have to say to this? "Why don't you go get a REAL job!" As if I worked the counter at a fast food place or something... It'll be like the US, when China and India come into their own, it'll implode in the West. And it will implode BIG.
Posted by: glen | Apr 19, 2021 3:30:43 PM
either way ! the markets are cyclical, and so we should be prepared for the down turn. If the Canadian government is concerned about the average canadian family struggling to get ahead and afford to put a roof over their heads then yes, Canada should restrict foreigners from buying real estate. After all, many people around the world would like a piece of the Canadian dream and they are 'restricted' so if the might loonie is all that matters, then let drug cartels buy as much as they want.
Posted by: Lester | Apr 20, 2021 10:18:32 AM
NO! what would happen to all levels of governments without more new sheep to shear?
Posted by: David | May 15, 2021 12:51:52 AM
Why not? Yes! We got almost no population and too many old people. Young bucks don't want to work and go to school. So who will buy those big homes? We have lost our generation and now others will come and show us how. Life goes on and market dictates everything. Which is a good thing. Let the good times role again.