A ban on foreigners buying residential property in Canada went into effect on Sunday in a move aimed at providing more homes to locals facing a housing shortage. There are several exceptions to the Act that allow individuals such as refugees and permanent residents to buy homes who are not citizens.
In late December, Ottawa also clarified that the ban would only apply to city residences and not recreational properties such as summer cottages.
The temporary two-year measure was proposed by Prime Minister Justin Trudeau during the 2021 election campaign when rising prices put home ownership beyond the reach of many Canadians.
“The desirability of Canadian homes is attracting profiteers, wealthy corporations and foreign investors,” his Liberal Party said in its election issue at the time.
“This is leading to a real problem of unused and vacant housing, rampant speculation and skyrocketing prices. Homes are for people, not investors.”
Following their 2021 election victory, the Liberals quietly enacted the Prohibition on the Purchase of Residential Property by Non-Canadians Act.
Major markets such as Vancouver and Toronto have also introduced taxes on non-residents and vacant homes.
In recent days though, the country’s real estate market has cooled for sellers as mortgage rates followed the Bank of Canada’s aggressive monetary policy to rein in inflation.
According to the Canadian Real Estate Association, median home prices have fallen from a peak of more than $800,000 (US$590,000) in early 2022 to just over $630,000 (US$465,000) last month.
Many experts have also said that restrictions on foreign buyers – who account for less than five per cent of home ownership in Canada according to the National Statistics Agency – will not have the desired effect of making homes more affordable.
Rather they point to the need for more housing construction to meet demand.
The Canada Mortgage and Housing Corporation – the national housing agency – said in a June report that some 19 million housing units would be needed by 2030.
That means 5.8 million new homes would have to be built, or 3.5 million more, to meet that demand.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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