Canada Extends Ban on Foreign Home Buyers to 2027

Canada Extends Ban on Foreign Home Buyers to 2027

The Canadian government has announced an extension of the existing ban on foreign individuals purchasing homes in Canada for an additional two years.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act, which initially took effect in 2023 to address concerns about non – residents driving up housing prices, was set to expire at the end of 2024 but will now be prolonged until
January 1, 2027.

This decision is tied to a set of policies aimed at mitigating the housing shortage caused by population growth due to immigration.
For instance, Canada is allocating billions to persuade cities to modify zoning
laws to allow for increased housing density and has imposed limits on the issuance of temporary visas to international students.

Canada’s national vacancy rate reached a historic low in 2023, as reported by the Canada Mortgage and Housing Corp.
The central bank’s housing affordability index, measuring the portion of after-tax income allocated to housing expenses, is at its most critical level since around 1981, when Canadian mortgage rates exceeded 20%. Costs associated with housing are the most significant contributing factor to inflation in Canada.

By extending the ban on foreign buyers, Finance Minister Chrystia Freeland stated, By extending the foreign buyer ban, we will ensure houses are used as homes for Canadian families to live in and do not become a speculative financial asset class.

Data collected by Statistics Canada as of 2022 indicates that foreigners owned between 2% and 8% of residential properties, depending on the region. In the Toronto and Vancouver metropolitan areas, where housing prices have surged over the past decade, non-residents owned 3.8% and 6.4%, respectively, of residential properties.

Diana Mok, a professor specializing in real estate finance and urban economics at Western University in London, Ontario, wrote last year about the foreign ownership ban, stating that the number of foreign participants is scant relative to the volume of transactions in the market.
She argued that the ban is more of a political gesture than an effective tool.