The government unveiled details of its foreign buyer ban on residential properties earlier this week, just days before the rules are set to take effect.
Starting January 1, 2023, non-Canadians will be prohibited from purchasing residential real estate for a period of two years, although the government announced a number of exemptions. Some of those exemptions include:
Recreational properties (cottages, cabins and other vacation homes);
Buildings with more than three units;
International students based on certain conditions, including having spent most of the previous five years in Canada;
Foreign nationals with temporary resident status;
Workers who have filed tax returns in Canada for at least three of the last four years prior to buying their property;
Refugees, refugee claimants and those fleeing international crises;
Diplomats and consular staff living in Canada
A member update sent by Mortgage Professionals Canada indicated that the legislation “does not rely on mortgage professionals to enforce the ban, however both the non-Canadian purchaser of prohibited property and any person or entity that knowingly assists in the purchase can be fined up to $10,000 and the property can be forced to be sold.”
In terms of the impact on closings with a signed purchase agreement in place, the MPC update confirmed that “if there is an agreement of purchase and sale that is entered into before January 1, it may close after the prohibition is in effect.”
Additional information is available from the CMHC website.
Despite affordability challenges, the desire to own a home is growing: OREA
The hurdles to homeownership may be higher these days, but so too is the desire to become a homeowner.
Nearly 7 in 10 non-homeowners (69%) said they “really want to own a home,” a nine percentage-point increase since January, according to new a poll commissioned by the Ontario Real Estate Association (OREA).
Just 5% of respondents identified as “someone who would be happy renting forever,” down sharply from 22% nearly a year ago.
“At a time when homeownership rates are on the decline, the desire to own a home is still growing,” said Stacey Evoy, President of OREA.
Despite a decline in home prices over much of the year, affordability did not improve due in part to a rapid rise in interest rates over the same period.
Over 8 in 10 Ontarians (82%) said today’s higher mortgage rates are making buying a home more difficult (37%) or much more difficult (45%).
“These rapid, outsized increases we have been seeing to curb inflation are hurting Ontario’s families – it’s clear Ontarians are feeling the financial pressures of inflation amid an existing housing affordability crisis,” Evoy added. “Housing remains a spectrum issue across the province, and we must work together to keep housing affordable and the dream of homeownership within reach.”
Higher share of household budgets going to housing
Over six in 10 Ontarians are spending over 30% of their household budget on housing, according to a poll commissioned by the Ontario Real Estate Association (OREA).
Respondents were nearly unanimous (95%) in agreeing that life is more expensive compared to two years ago. So much so that nearly half said they may have to make difficult decisions to make ends meet, including cutting down on driving, eating out, entertainment and spending less on groceries.
Canadian economy ekes out slight growth in November
Canada’s economy grew just 0.1% in October, down from the 0.2% growth seen in September, according to data released Friday by Statistics Canada.
The gain was led by the public sector, wholesale and “client-facing industries,” while weakness was primarily in the goods-producing industries, noted TD Bank economist James Orlando.
“This deceleration of growth is aligned with our view that the lagged effects of interest rate hikes and still-high inflation is causing Canadians to gradually tighten their purse strings,” he wrote in a research note. “Though there will be a lot of data coming out between now and the Bank of Canada’s (BoC’s) next policy decision in late January, we think the Bank has another hike left in store. That would bring the policy rate to a very restrictive 4.5%.”
Recession on the minds of 8 in 10 Canadians
The prospect of a looming recession has 81% of Canadians worried, 28% of whom are “very worried,” according to a survey commissioned by BNN and RATESDOTCA.
The Leger survey found less concern among those older than 55 (25%) versus those in the age group of 18 to 34 (28%).
A majority of Canadians (56%) say they are preparing for a recession, with 38% saying they are cutting down on expenses. Other measures include paying down debt (18%), keeping their savings liquid (14%) and asking for or taking on more work (6%).
The survey also found that homeowners are slightly more concerned (84%) about a recession compared to those who rent (80%).