This year, a new Canadian law took effect on January 1. The law bans foreign buyers from buying residential properties as investments for two years. The law was passed because of the sudden rise in Canadian home prices. The rise in home prices started during the pandemic. And many believe that foreign buyers were responsible for snapping up the supply of homes as investments.
The campaign website of Prime Minister Justin Trudeau’s party commented on this issue last year. The comment read that the desirability of Canadian homes is attracting profiteers. It is also attracting foreign investors and wealthy corporations. As a result, this leads to underused, vacant housing, rampant speculation, and high skyrocketing prices. The comment said that homes are for people and not investors.
However, the law gives exceptions for home purchases by immigrants and permanent residents of Canada who are not Canadian citizens.
The Home Prices In Canada
But, the rising prices in 2020 and 2021 were reversed in 2022 before the law took effect. Interestingly, average home prices in Canada are above $800,000. It has fallen steadily since then. It dropped about 13%, according to the Canadian Real Estate Association.
Also, the Bank of Canada was raising interest rates. This resulted in high mortgage rates in the country. It was similar to the United States and other countries hiking mortgage rates.
However, the real estate association voiced concern about this law. They are concerned even with the exemptions for buyers who intend to move to Canada.
Today, Canada has a reputation as a multicultural nation. And the country welcomes people from around the world. But, this prohibition on the purchase of residential property by non-Canadians can impact the country’s reputation as a welcoming nation.
CREA (Canadian Real Estate Association) expressed concern that the ban can prompt retaliation by USA and Mexico. This can be true in prohibiting purchases in those countries by Canadians. This can be especially true for retirees looking for winter homes away from Canada.