Most foreigners in Canada are prohibited from buying homes for two years

Canada has made it clear that the ban will only apply to city dwellings. (representative)

Ottawa:

A ban on foreigners buying residential property in Canada went into effect on Sunday, aiming to make more homes available to local residents facing a housing crisis. Several exceptions to the law allow individuals such as refugees and non-citizen permanent residents to purchase homes.

In late December, Ottawa also clarified that the ban would only apply to city residences and not recreational properties such as summer cottages.

The two-year temporary measure was proposed by Prime Minister Justin Trudeau during the 2021 election campaign when rising prices put homeownership out of reach for many Canadians.

“The desirability of Canadian homes attracts freeloaders, wealthy corporations and foreign investors,” his Liberal Party said in its election advert at the time.

“This leads to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors.”

After winning the 2021 election, the Liberals quietly introduced a bill banning residential property purchases by non-Canadians.

Major markets such as Vancouver and Toronto also taxed non-residents and vacant homes.

Despite the recent peak, the state of the country’s real estate market has softened for sellers as mortgage rates followed the Bank of Canada’s aggressive monetary policy in an effort to rein in inflation.

According to the Real Estate Association of Canada, median home prices have fallen from a peak of over C$800,000 (US$590,000) at the start of 2022 to just over C$630,000 (US$465,000) last month.

Several experts have also said that bans on foreign buyers — who account for less than five percent of home ownership in Canada, according to the national statistics agency — will not have the desired effect in making homes more affordable.

Instead, they point to the need for more housing construction to meet demand.

Housing and Mortgage Canada – the national housing agency – said in a report released in June that nearly 19 million housing units will be needed by 2030.

This means that 5.8 million new homes must be built, or 3.5 million more than are currently expected to be built to meet this demand.

(Except for the headline, this story was not edited by the NDTV staff and was published from a syndicated feed.)