Foreigners banned from buying homes as Canada grapples with housing crunch

Canada (Image: Reuters)

Amid a housing crunch in Canada, the country's government has introduced a ban which does not allow immigrants to buy property. The move is aimed at making more homes available to Canadian locals. Refugees and permanent residents have been allowed to purchase land as exceptions to the ban. In December the state of Ottawa clarified that the ban would apply only to city dwellings and not to recreational properties such as summer cottages a report by the Agence France Presse said.

The move was proposed by Canadian Prime Minister Justin Trudeau as a temporary two year measure during his 2021 election campaign to tackle soaring real estate prices.

"The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors," Trudeau's Liberal Party said in its election plank at the time.

Following their 2021 election victory, the Liberals quietly introduced the Prohibition on the Purchase of Residential Property by Non-Canadians Act.

Among other measure to tackle the housing crisis, major realty markets such as Vancouver and Toronto have also introduced taxes on non-residents and empty homes.

Highlighting the vision behind the move the Liberal Party said "This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors."

The country's real estate market has cooled for sellers as mortgage rates followed the Bank of Canada's aggressive monetary policy in a bid to rein in inflation according to AFP's report.

A fall in the average home prices has been seen from a peak of Can$800,000 (US$590,000) at the start of 2022 to just over Can$630,000 (US$465,000) last month AFP reported citing data from the Canadian Real Estate Association.

Experts have criticised the move and have highlighted the fact that the ban on foreign buyers is not enough as they account for less than five percent of home ownership in Canada, according to the national statistical agency.

In lieu of the ban experts suggest an increase in housing construction to meet demand. The Canada Mortgage and Housing Corporation -- the national housing agency -- said in a June report that close to 19 million housing units will be needed by 2030.

That means 5.8 million new homes must be built, or 3.5 million more than are currently anticipated to be built to meet that demand, it said.