Canada: A prohibition on foreigners purchasing residential property in Canada went into force on Sunday, with the goal of making more properties available to Canadians battling a housing shortage.
Several exclusions in the statute allow non-citizens, such as refugees and permanent residents, to purchase property.
Ottawa also emphasised in late December that the prohibition will only apply to city houses and not to recreational properties such as summer cottages.
Two-year temporary solution was offered by Prime Minister Justin Trudeau
The temporary two-year solution was offered by Prime Minister Justin Trudeau during the 2021 election campaign, when rising property prices pushed many Canadians out of reach.
“The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors,” his Liberal Party stated at the time in its electoral platform.
“This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors.”
Following their election victory in 2021, the Liberals discreetly introduced the Prohibition on Non-Canadians Purchasing Residential Property Act.
Non-residents and unoccupied residences are also taxed in major cities such as Vancouver and Toronto.
Despite a recent high, the country’s real estate market has cooled for sellers as mortgage rates have risen in response to the Bank of Canada’s strong monetary policy in an attempt to control inflation.
According to the Canadian Real Estate Association, average home prices have dropped from more than Can$800,000 (US$590,000) in early 2022 to just over Can$630,000 (US$465,000) last month.
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Additional home production is required to meet demand
Many experts have also expressed concern that the ban on foreign purchasers, who account for less than 5% of property ownership in Canada, may not have the desired impact of making homes more accessible. Rather, they indicate that additional home production is required to meet demand.
The national housing agency, Canada Mortgage and Housing Corporation, stated in a June report that nearly 19 million housing units will be required by 2030.
That means 5.8 million new houses must be developed, which is 3.5 million more than is currently expected to be built to fulfil demand, according to the report.
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