FOREIGNERS NOW BANNED FROM BUYING HOMES IN CANADA
Several exceptions in the new Canadian law allow individuals such as refugees and permanent residents who are not citizens to buy homes
Canada in 2023 is closing its doors to foreign investors who want to purchase homes.
A new Canadian law took effect January 1 that essentially bans foreign buyers from buying residential properties as investments for two years. The law was passed because of a spike in Canadian home prices since the start of the pandemic – and some politicians’ beliefs that foreign buyers were responsible by snapping up supply of homes as investments.
“The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors,” said the campaign website of Prime Minister Justin Trudeau’s party this past year. “This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors.”
The law provides exceptions for home purchases by immigrants and permanent residents of Canada who are not citizens.
But the steep rise in home prices in 2020 and 2021 was already reversed in 2022, well before the law took effect. Average home prices in Canada peaked just above $800,000 Canadian in February and have fallen steadily since then, dropping about 13% from that peak, according to the Canadian Real Estate Association.
The Bank of Canada has been raising interest rates, resulting in higher mortgage rates in the country – just like in the United States and other countries that have been hiking rates.
CREA’s price index is still up 38% from the end of 2019, before the pandemic, but the group said that inventory of homes for sales has returned to pre-pandemic levels
While housing prices in Canada dipped slightly in 2022, they remain much higher than a decade ago.
Housing prices were up 48% last year compared to 2013, when the average price of a home was C$522,951.
Meanwhile, the average household income for Canadians has struggled to keep pace to rising home prices. The latest data indicates the median after-tax household income grew 9.8% from 2015 to 2020.
These numbers set Canada’s housing market up as one of the most unaffordable in the world, ranking the country higher than New Zealand, the US and the UK, according to a Statista analysis of house-price-to-income ratios.
It is believed to be a much good news for the PR residents as the prices of properties will drop, they will be able to buy homes and for student it will result in lowering the rent prices.