Foreign buyers have been one of the biggest factors in this super hot Canadian real estate market over the years, but the question is: Will it continue?
Chinese buyers have made up the majority of foreign buying in Canada. Last year, $700 billion to $1 trillion U.S. dollars left China. A lot of the money has moved into real estate, not just in Canada, but also Australia, New Zealand and the United States.
Toronto and Vancouver are the markets in Canada that have the most amount of foreign investment and it has caused the prices to increase dramatically. Affordability for local citizens has been the greatest concern. Not only are first time home buyers are shut out of the market, but also people cannot afford to move up in their real estate purchases.
So what happens now? Is it the government’s responsibility to slow down the foreign buying and how does the government respond to these issues? That’s a difficult issue to tackle and one that has no easy answer.
The government has recently made it a rule that you need to put at least 10% down on a purchase of home over $500k but this did nothing to stop foreign investment since they have millions to spend.
The government could look to see if there is any criminal activity with these purchases such as money laundering. However, while there is a potential for money laundering, it seems that the purchase of Canadian homes from foreign buyers is not through illegal activity and therefore they are not committing any crimes that could be punishable by law.
In China, officials have been attempting to crackdown on underground banks that are used to transfer money in and out of the country. These underground banks still remain and grow despite law enforcements’ attempt to shut them down.
So the answer is very unclear. It seems for now that yes, it will continue until both governments can come up with a viable solution to slow it down.