Canada has placed a ban on foreigners buying property. The ban which took effect on Sunday aims to make homes available to Canadians facing a housing crunch.
The ban is called the Prohibition on the Purchase of Residential Property by Non-Canadians Act.
A “non-Canadian” refers to anyone who is not a Canadian citizen, permanent resident, or person registered under the Indian Act, according to the Government of Canada.
This ban also applies to companies in Canada that are controlled by someone who is non-Canadian, privately-held, or not listed on a stock exchange in Canada.
These individuals and companies are prohibited from buying residential properties in “a census metropolitan area or a census agglomeration,” as well as vacant land that is zoned for residential use or mixed-use in these areas, for a period of two years.
The law provides exceptions for home purchases by immigrants and permanent residents of Canada who are not citizens.
But the steep rise in home prices in 2020 and 2021 was already reversed in 2022, well before the law took effect. Average home prices in Canada peaked just above $800,000 Canadian in February and have fallen steadily since then, dropping about 13 per cent from that peak, according to the Canadian Real Estate Association.
The Bank of Canada has been raising interest rates, resulting in higher mortgage rates in the country – just like in the United States and other countries that have been hiking rates.
CREA’s price index is still up 38 per cent from the end of 2019, before the pandemic, but the group said that the inventory of homes for sale has returned to pre-pandemic levels.
The real estate association voiced concern about the law, even with the exemptions for people who intend to move to Canada.