A ban on foreigners buying residential property in Canada took effect Sunday, aimed at making more homes available to locals facing a housing crisis. Several exemptions in the law allow individuals such as refugees and permanent residents who are not citizens to buy homes.
At the end of December, Ottawa also clarified that the ban would only apply to townhouses and not recreational properties such as summer cottages.
The temporary two-year measure was proposed by Prime Minister Justin Trudeau during the 2021[ads1] election campaign when soaring prices put home ownership out of reach for many Canadians.
“The desirability of Canadian homes attracts profiteers, wealthy corporations and foreign investors,” his Liberal Party said in its election manifesto at the time.
“This leads to a real problem of underused and vacant housing, widespread speculation and sky-high prices. Housing is for people, not investors.”
After the election victory in 2021, the Liberals quietly introduced the ban on the purchase of residential property by non-Canadians.
Major markets such as Vancouver and Toronto have also introduced taxes on non-resident and vacant homes.
Despite a recent heyday, the country’s real estate market has cooled for sellers as mortgage rates followed the Bank of Canada’s aggressive monetary policy in an effort to curb inflation.
According to the Canadian Real Estate Association, average home prices have fallen from a peak of more than Can$800,000 (US$590,000) at the start of 2022 to just over Can$630,000 (US$465,000) last month.
Many experts have also said the ban on foreign buyers – who accounted for less than five per cent of home ownership in Canada, according to the National Bureau of Statistics – would not have the desired effect of making housing more affordable.
Rather, they point to a need for more housing construction to meet demand.
The Canada Mortgage and Housing Corporation – the national housing agency – said in a June report that close to 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 what is now expected to be built to meet this demand, it says.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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