Since January 1, Canada has banned purchase of residential property by non-Canadians for two years.
Like many countries during the pandemic, Canada saw huge price increases for both sales and rentals as borrowing rates plunged to record lows, taking inventory with them.
Prime Minister Justin Trudeau said: “The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors. Homes are for people, not investors.”
https://www.smh.com.au/world/north-america/canada-bans-forei…
What do you think?
Would you like a similar scheme in Australia?
Low interest rates were one reason, but not the only. Lack of social activities, particularly travel, and the unavailability of other goods due to supply chain constraints meant that people saved up a lot more than they otherwise would have been able to. This, in turn, allowed them to afford more expensive houses along with lower interest rates.
Remember that most people purchase with an LVR of 80%, so any increase in savings will unlock a five-fold increase in what they can afford. E.g., if you have $200K, you can afford a $1M house (ignoring stamp duty for sake of example) at an 80% LVR, but if you now have $300K, you can afford a $1.5M house. If everyone was able to save even just $50K more during the pandemic, you can easily see how house prices rose by $200-300K, plus lower interest rates unlocking more purchasing power.
My speculation is that there are also likely to be social factors involved as well, including lockdowns encouraging people to purchase larger houses than they otherwise would have, lack of opportunity to travel or relocate overseas meant more people wanted to purchase and settle down. People who might have wanted to purchase for some time but were waiting out might have gotten spooked by rapidly rising prices and jumped in…etc.