In response to the surging real estate market and escalating concerns about housing affordability, Canada has decided to extend its ban on foreign home buyers for an additional two years. Originally implemented by Prime Minister Justin Trudeau’s government in 2022, the measure, which was set to expire on January 1, 2025, will now be in effect until January 1, 2027.
The decision to prolong the ban comes as the Canadian housing market displays signs of a rebound, particularly in cities like Toronto and Vancouver. Finance Minister Chrystia Freeland emphasized the government's commitment to ensuring that homes are primarily utilized by Canadian families for dwelling purposes rather than becoming speculative financial assets.
Freeland stated on Sunday, "By extending the foreign buyer ban, we will ensure houses are used as homes for Canadian families to live in and do not become a speculative financial asset class." The government is particularly concerned about the risk of residents being priced out of their local housing markets.
However, the ban includes exceptions for specific cases. Non-Canadians are allowed to purchase vacant land or residential property for development purposes. Foreign students and individuals on work permits are also exempt, provided they have resided in the country for an extended period and have not previously acquired property.
The decision to extend the ban aligns with a broader effort by various levels of the Canadian government to address soaring housing costs. The national benchmark home price experienced a significant surge in December, reaching $730,400, marking a 36% increase over the past five years. In major cities like Vancouver and Toronto, the average home prices have climbed to $1.2 million and $1.1 million, respectively.
To further cool the housing market, Toronto city council is set to deliberate on a motion this week proposing a 10% tax on home purchases by non-residents, in addition to the existing 25% "non-resident speculation tax" imposed by the province of Ontario. The motion aims to "maintain a level of affordability in the residential real estate market by discouraging international buyers from purchasing property in the City of Toronto, particularly those buyers who do not intend to live in the property," according to a recommendation by the city’s executive committee.
Toronto Mayor Olivia Chow’s office did not provide an immediate response to inquiries on Sunday, leaving the outcome of the motion yet to be determined. As Canada continues to navigate the complexities of its housing market, policymakers remain focused on balancing the needs of residents with the broader economic considerations tied to real estate.
