Over the weekend, Canada introduced a ban on foreigners buying properties.
The ban would only apply to city dwellings and not to recreational properties such as summer cottages. Refugees and permanent residents who are not citizens will also still be able to buy homes.
When the ban was first flagged during the 2021 election campaign, Prime Minister Justin Trudeau claimed foreign buyers were pushing home ownership out of the reach of Canadians.
“The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors”, Trudeau’s Liberal Party said in its election pitch at the time.
“This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors”.
PropTrack director of economic research Cameron Kusher has labelled Canada’s foreign ownership ban a populist xenophobic gimmick that is “bad policy”, despite admitting that more foreign buyers will now target Australia:
“We know that Canada has been one of the most popular places for investment for foreign buyers, particularly Toronto and Vancouver. A lot of that investment has come from China,” [Kusher] told news.com.au.
“If for the next two years people can’t invest in Canada, they’ll look for alternatives”…
Labelling the policy a “bandaid solution” and “a populist solution”, he added: “Certainly foreigners have more buying power than first-time buyers. But I don’t think it’s the crux of the issue. These things do tend to play up on xenophobia a bit”…
“Foreign investment is a small part of the housing market,” [Kusher] said.
“Generally speaking, I would say this is a bad policy and is not something Australia should do.”
Meanwhile, data from Chinese property portal Juwai IQI shows that Australia has edged out the US and Canada as the most sought-after destination for Chinese-based buyers:
“We expect Chinese outbound travel and accompanying property investment to increase rapidly in January from its current very low level,” [Juwai IQI co-founder and chief executive Kashif Ansari said].
Sydney-based Black Diamondz director Monika Tu, who markets Australian properties to Chinese buyers, is also fully booked-out with clients looking to buy in Australia:
“With the world so unsettled, right now is the best opportunity for us to market property in Australia with it considered a very safe place and a favourable investor environment even though it is expensive,” Ms Tu said.
“Improved relations between China and Australia will give wealthy buyers even more confidence to invest in our property market”…
“I’m fully booked out with clients in the run-up to Luna New Year and in late January and into February,” she said.
I would be lying if I claimed that foreign buyers were a key driver of Australia’s unaffordable housing. However, they do play a bit role that is likely to grow in influence this year now that China’s border is reopening.
Given this fact, Australia’s authorities should tighten up enforcement of Australia’s foreign ownership rules, alongside implementing the promised anti-money laundering legislation pertaining to property, most of which comes from China.
There is nothing xenophobic about restricting foreign ownership of residential property. Most Asian nations (including China) do the same to safeguard locals. Yet nobody calls these nations xenophobic – a term that only seems to apply to Australia.
