Canada's ban on foreign buyers hasn't made homes more affordable

29-Dec-2023

A year ago, the federal government instituted a foreign buyer ban after passing the Prohibition on the Purchase of Residential Property by Non-Canadians Act in 2022.

A year ago, the federal government instituted a foreign buyer ban after passing the Prohibition on the Purchase of Residential Property by Non-Canadians Act in 2022. The two-year ban, which came into effect on Jan. 1, barred non-citizens, non-permanent residents and foreign-controlled companies from buying up Canadian property as an investment.

Critics say the foreign buyers ban, which was aimed at making housing affordable for Canadians, had many exemptions and was more of a political manoeuvre. They say it's clear housing remains out of reach for too many in Canada, and that the country should look to other places in the world to find strategies to foster home ownership.

CMHC data reveals that only two per cent of real estate purchases in 2021 were made by non-Canadians, according to communications obtained by Global News through Access to Information.

A few months after the ban was put into place more exemptions were added. These included students, first-time buyers and properties under $500,000.

"There were so many exemptions to the foreign buyer ban that it really didn't make any difference at all," said Tim Sabitov of Team 3000 Realty Ltd., in Vancouver.

According to Davidoff, high-end home prices did plummet initially after the foreign buyers ban — but he says the real driver was soaring interest rates that triggered an economic slowdown.

"The most affordable products actually rose in price for whatever reasons after the foreign buyer tax."

He says he's not sure focusing only on foreign buyers helps make things more affordable and believes the focus should be on how a property is used — not who owns it.

Any impacts of the ban were short-lived, according to Brendon Ogmundson, the chief economist for the B.C. Real Estate Association. "The foreign buyer ban was more political than economic policy or housing policy," he said.

Stagnant wages, a lack of affordable housing stock and a legacy of attracting global property investors due to weak regulations all feed the affordability problem, according to David Ley, author of Housing Booms in Gateway Cities.