Canada to ban foreigners from buying homes as prices spike

Canada plans to ban most foreigners from buying homes and intends to provide billions of dollars to kickstart construction in an attempt to cool off a surging real-estate market.

The specific details will be contained in Finance Minister Chystia Freeland’s budget on Thursday, according to a source close to the matter. They requested to remain anonymous.

House prices in Canada have increased by more than 50% over the last 2 years. The market saw a record increase in February as buyers took action ahead of interest rate increases by the Bank of Canada, which took the benchmark price of a home to C$869,300 (US $693,000).

The ban will not apply to students, foreign workers or foreign citizens who are permanent residents of Canada according to the source.

“I don’t think prices are going to fall as a result, though I do think it takes away at lease some of the competition in what is the most competitive market in Canadian housing history,” Simeon Papailias, who is founder of the real estate investment company, REC Canada. “I don’t think a two-year band-aid is going to have an impact on what’s a fundamental lack of supply.”