Starting January 1st 2023, foreigners will not be able to purchase property in Canada. This ban will be in effect for two years, until 2025. However, experts doubt the believe that this ban will help lower the housing prices in the country.
This controversial ban was decided on last year due to the sharp price increases in the Canadian housing market.
Canada is following New Zealand which have a similar ban in 2018. Then, New Zealand succeeded in lowering the number of foreign homeowners from to 2.9% to 0.4%. Although the ban reached its’ goal, the price of the New Zealand housing market continued to soar.
The fact that students and migrant workers will be exempt from this controversial ban has
Real estate experts believe that it will not have much effect the Canadian housing market.
In British Columbia, in 2021 only 1.1% of the real estate transactions were made by foreign buyers.
The Chief Economist at the Real Estate Association of British Columbia, Brandon Ogmundson, argued that the ban is more of a political issue than an economic one: “In recent years, many believe that foreign investors and foreign money are driving up apartment prices, but in reality this is caused by low interest rates and very little supply.”
A spokesman for the Canadian government supported Ogmundson’s opinion and added that “The apartments should be homes for Canadians and not investments by foreigners.”
A senior economist at the Bank of Montreal named Robert Kavcic said that this ban will have “a minimal effect on the ground, especially today, when much more significant factors such as interest rates and market psychology dictate real estate activity and prices.”
According to the new ban international students and foreign workers who have lived in Canada for a certain number of years and intend to become permanent residents will be allowed to purchase one property. These rules will only apply to residential properties with 3 or less housing units.
