It is no longer permitted for foreigners to buy or purchase any property in Canada, according to the recent official development implemented on Sunday. The development to ban foreigners from owning any residential property in Canada has been announced as a result of the increase in home prices since the beginning of the pandemic. The news has been highlighted by CNN business.
The Canadian government passed this law in response to rising home prices and the belief that some buyers were purchasing homes as investments, contributing to the shortage of available housing. The campaign site for Justin Trudeau’s party in Australia stated that the attractiveness of Canadian homes is attracting individuals looking to profit, wealthy corporations, and foreign investors.
“This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors,”
according to the campaign site.
According to CNN business, the law includes an exception for immigrants and permanent residents (PRs) of Canada who are not citizens. Nevertheless, the increase in home prices in Canada in 2020 and 2021 had already started to reverse by 2022 before the law was implemented. As per the data of the Canadian Real Estate Association, the mean home prices reached a high of around CAD 800,000 in February and have declined approximately 13% from that peak since then.
The Canadian Real Estate Association’s (CREA) price index is up 38% from the end of 2019, but the group has expressed concern about the impact of the new law on the housing market, even with the exemptions for immigrants and permanent residents. The association also noted that the inventory of homes for sale has returned to pre-pandemic levels. Canadian banks are also contributing to the rise in housing prices by raising interest rates, leading to higher mortgage rates in the country. Despite these challenges, Canada has a reputation as a multicultural nation.
“As currently proposed, the prohibition on the purchase of residential property by non-Canadians can impact our reputation as a welcoming nation,”
“The potential benefits of the ban are likely to be modest.”
said the group’s statement.
Now, CERA is concerned that the ban could lead to retaliation by the US and Mexico, prohibiting purchases by Canadians. Canadians are the largest foreign buyers of American properties, with over half of those purchased in Florida and Arizona. CREA stated that Canadians often purchase vacation and residential properties in various countries, particularly in the US.