Canada bans foreigners from buying residential properties, but with exceptions

Canada has imposed a ban on residential properties being sold to foreigners as investments. The ban came into effect on Sunday and the decision follows a surge in property prices.

Home prices in the country have surged since the beginning of the Covid-19 pandemic, while some politicians believe buyers were responsible for snapping up the supply of homes as investments.

According to a report by CNN, 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 site of Prime Minister Justin Trudeau’s party had stated in the past year.

“This is leading to a real problem of under-used and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors,” the campaign site read.

However, the steep rise in home prices in 2020 and 2021 was already reversed in 2022, well before the law took effect.

HOME PRICES AND INTEREST RATES IN CANANDA

According to the Canadian Real Estate Association (CREA), the average home price in Canada in February 2022 surged above $800,000 Canadian. The prices then declined by nearly 13 per cent.

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 real estate association voiced concern about the law, even with the exemptions specified.

The association also said the ban could prompt retaliation by the United States and Mexico to prohibit purchases in those countries by Canadians, especially retirees looking for winter homes away from the Canadian winter.