Who can and cannot buy a house in Canada? Ban on foreigners comes into effect

Purchasing a home in Canada may now be a distant dream for foreign investors, at least for some time. The country has reportedly imposed a ban on residential properties being sold to foreigners as investments.

A new Canadian law took effect on January 1. The law essentially bans foreign buyers from buying residential properties as investments for two years, CNN Business reported.

The law comes amid surge in property prices since the start of the pandemic. Politicians believe foreign buyers were responsible for snapping up the supply of homes as investments.

However, the new ban has an exception for immigrants and permanent residents of Canada, who are not citizens.

The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors, the campaign website of Prime Minister Justin Trudeau's party had stated in the past year. “This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors,” it read.

According to the Canadian Real Estate Association (CREA), 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, the CNN reported. 

The Bank of Canada has been raising interest rates, resulting in higher mortgage rates in the country.

CREA’s price index is still up 38 per cent from the end of 2019, before the pandemic. However, the group said that the inventory of homes for sale has returned to pre-pandemic levels.

The group also said that Canada has built a reputation as a multicultural nation that welcomes people from around the world. It added that the ban on the purchase of residential property could impact the nation's reputation as a welcoming nation.

It further expressed concern that the ban could prompt retaliation by the United States and Mexico to prohibit purchases in those countries by Canadians.

Also Read: Global economy faces tougher year in 2023 on slowdown in US, Europe, China: IMF