A ban on foreigners buying homes in Canada went into effect Sunday, with the aim of making more homes available to locals facing a housing crisis.
Several exceptions in the law allow individuals such as refugees and non-citizen permanent residents to purchase homes.
In late December, Ottawa also clarified that the ban would only apply to city homes and not recreational properties such as summer cottages.
The two-year temporary measure was proposed by Prime Minister Justin Trudeau during the 2021 election campaign, when rising prices put home ownership out of reach for many Canadians.
“The desirability of Canadian homes attracts freeloaders, wealthy businesses and foreign investors,” his Liberal party said in its election plan at the time.
“This leads to a real problem of underused and vacant housing, rampant speculation and skyrocketing prices. Homes are for people, not for investors.”
Following their 2021 election victory, the Liberals quietly introduced a ban on non-Canadians buying homes.
Major markets such as Vancouver and Toronto have also introduced taxes on non-residents and vacant properties.
Despite a recent boom, the country’s real estate market for sellers has cooled as mortgage rates followed the Bank of Canada’s aggressive monetary policy in an effort to contain inflation.
According to the Canadian Real Estate Association, average home prices have fallen from a peak of more than CAN$800,000 (US$590,000) at the start of 2022 to just over CAN$630,000 (US$465,000) last month.
Many experts have also said that banning foreign buyers — who account for less than five percent of home ownership in Canada, according to the National Bureau of Statistics — would not have the desired effect of making homes more affordable.
Rather, they point to the need for more housing to meet demand.
The Canada Mortgage and Housing Corporation, the national housing agency, said in a June report that nearly 19 million homes will be needed by 2030.
That means 5.8 million new homes will need to be built, or 3.5 million more than are currently expected to be built to meet that demand, it said.
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