Canada’s plan to cool a red-hot domestic property market by taxing foreign homebuyers who do not reside in the country could upset the industry recovery and further erode international demand, analysts said.
The proposal has gained traction in Prime Minister Justin Trudeau’s government as property agents recorded roaring business and surging prices this year despite the Covid-19 pandemic, suggesting improving sentiment among investors on the market outlook.
Some 461,818 homes have changed hands this year through October, an 8.6 per cent increase from a year earlier, according to the Canadian Real Estate Association (CREA). It was the second-highest January-October volume on record, trailing only 2016, it added.
Prices rose 10.9 per cent in October from a year earlier, the most since July 2017, the association said in a November 16 market update. The unadjusted national average home price rose by 15.2 per cent to a record C$607,250 (US$474,508), influenced by sales in Greater Vancouver and Greater Toronto Area, two of Canada’s most active and expensive markets.