Canada bans foreigners from buying their homes for two years

Canadian investors have been buying up swathes of farming land and irrigation water in Australia, particularly in the past four years.

There are restrictions, mainly coming from provincial governments, on overseas investors buying into Canadian agriculture.

Last week's ban does not include farmland but Canada's radical attempt to remedy its booming housing market has many parallels with Australia.

House prices across regional Australia are 24.3 per cent higher than a year ago, according to CoreLogic.

Last week's budget announcement from the government of Prime Minister Justin Trudeau is aimed squarely at that country's booming residential housing market.

Much like Australia, Canada's housing market is setting price records, on the back of low interest rates, low inventory and high demand - especially in regional areas.

Critics of the government's new housing policy say it is populist and likely to have little impact given foreign ownership accounts for three per cent of all owned properties.

In Australia, foreign ownership of residential property is at similar levels.

According to a NAB survey last year, the market share of foreign buyers in new property markets ranges between 2pc-4pc.

Victoria is the exception with foreign buyers involved in about 9pc of real estate deals.

Foreigners can buy an investment property in Australia but there are already restrictions on the type of housing they can buy.

According to recent statistics from the Foreign Investment Review Board, most new foreign involvement is in new dwellings and vacant land priced under $1 million.

China tops the list of foreign ownership of residential real estate, again at low levels.

When total foreign freehold and leasehold interests are combined China has the largest holding of 2.3pc of Australian farmland, shadowed by the United Kingdom (2.2pc), the USA (0.8pc), Netherlands 0.7pc, and Canada with 0.6pc.

Nine out of 10 residential real estate sales to foreign interests are in Victoria, New South Wales and Queensland.

The Canadian government is also imposing higher taxes on people who sell their home within a year of buying them.

The ban will apply to condos, apartments, and single residential units - permanent residents, students and foreign workers would be exempted, along with foreigners who are purchasing a primary residence in Canada.

The Canadian budget also included billions of dollars for new housing and measures to help Canadians trying to get into the market.

Australian federal and state governments are also promoting schemes to help new buyers get into home ownership in city and regional areas.

MORE READING: Another record smashed for farmland in the Wimmera.

There is mostly bipartisan support for a program which allows first home buyers to purchase property with either a 5 or 2 per cent deposit and avoid paying lenders mortgage insurance.

To access the regional scheme, applicants must either build or purchase a newly built home, and earn no more than $125,000 a year and $200,000 for couples. House prices are capped at between $800,000 and $350,000 depending on the state, and location within the state.

Rental markets in Australia are also under pressure.

The lack of available housing has been identified as a key problem for regional areas trying the cash in on the newfound popularity of country versus city.

Addressing the undersupply of rental properties must be a key policy of whoever wins the upcoming Federal election, according to the Property Investment Professionals of Australia.

PIPA chair Nicola McDougall said political parties must develop policies which increases the supply of rental properties around the nation in the vein of the National Rental Affordability Scheme, which was scrapped after only a few years.

"With overseas migration set to soar over coming years, where are these new Aussies going to live if we don't even have enough rental properties to house our current population?" Ms McDougall said.

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