In a bid to give its citizens some measure of relief and assistance to alleviate its ongoing housing crisis, the Canadian government started 2023 by imposing a two-year ban prohibiting foreigners from buying residences in the country.
Effective January 1st, non-Canadian citizens and non-permanent residents are barred from buying houses in Canada. Those violating the ban will be charged a fine worth C$10,000.
When Investors Beat Homebuyers to the Punch
While non-Canadians only make up 6% of the country’s homeowners, the way many foreigners have snapped up residential properties as investments has driven up home prices throughout the country.
Currently, the average price of a house in Canada is around C$777,200, an amount that is over eleven times higher than the net income of most households.
The amount may be even higher in major cities like Toronto and Vancouver which are currently listed among the world’s least affordable housing markets. Last year, the average price of a home in a major urban area topped the C$1 million mark.
This puts further strain on most Canadian households who find the dream of owning a house slipping further away from their grasp as the average household income can’t seem to keep up with surging home prices. In fact, recent data shows that the average household income after taxes has only grown by 9.8% between 2015 and 2020.
Giving Each Canadian a Chance to Become a Homeowner
The new law aims to benefit Canadians by giving them more opportunities to buy their own homes.
Despite protests from those who believe that the ban will just make the housing market worse, federal housing minister Ahmed Hussen explained that the imposition of the ban was a necessary measure against buyers who purchase homes as commodities or investments rather than a home where one could raise a family.
In doing so, the Canadian government also hopes to address the way home prices have soared over the past several years.
However, as of press time, inflation-adjusted home prices in Canada are still rising despite the implementation of the ban.
Are There Any Exemptions?
There are, however, several situations wherein a foreign national can buy a house in Canada without facing a penalty.
The Canadian government exempted three specific sectors from the ban: refugee claimants, especially those from regions affected by armed conflict; foreigners with temporary work permits; and international students who have resided in Canada for at least five years.