Canada has been dealing with an ongoing real estate crisis for some time now, and there have been a variety of “solutions” that have been suggested to try and help the problem. Unsurprisingly, the only suggestion that the government has seemed to want to focus on is their proposal for introducing new taxes. Not long ago they introduced the new tax on foreign home buyers and real estate sales quickly slowed down. Some say that the real estate bubble is over and others say it hasn't even popped yet.
After the tax was introduced, it was said that real estate sales hit a four-year low, with sales of single family homes estimated to be dropping by about half. But some say the market might have already been cooling off. National Bank Financial analyzed the real estate board's data and determined that the detached-home market started to cool after May.
But now a legal challenge has been launched against the government for its implementation of the new tax on foreign buyers. A Vancouver law firm is looking to have a judge certify a class-action lawsuit against the B.C. Government and it's 15 percent tax on foreign buyers of homes in the Lower Mainland. Canadian legal experts maintain that the new foreign-buyers tax is a violation to the North American Free Trade Agreement by treating some investors in a discriminatory fashion.
It has also been argued that the new tax violates numerous other treaties that Canada has entered into as well. As well, Constitutional scholar Rocco Galati has also stated that the new tax is a violation of Section 15 of the Canadian Charter of Rights and Freedoms and he says that it prohibits discrimination based on race and national or ethnic origin.
The Organization for Economic Co-operation and Development recently announced that it had slashed its growth estimate for Canada this year as well. In their report they also admitted that prolonged low interest rates are likely contributing to the rising real estate prices and the ongoing bubble. But the Bank of Canada has just recently told Canadians that they can expect rates to stay where they are for quite some time yet, regardless of the trouble it might be causing for them.
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