The federal government has extended its ban on foreign home purchases by two years until January 1, 2027, with the goal of making housing more affordable for Canadians.
But while the ban was intended to lower home prices, there has been ongoing debate regarding its effectiveness.
RE/MAX Canada President Christopher Alexander dismissed the ban as a minor "nuisance" in 2023, believing the 2-6% provincial non-resident homeownership rates are not enough to significantly influence markets either positively or negatively.
Rather than making affordable homes more accessible, any impact of the ban seems to have been mostly felt at the premium end of the market. Thomas Davidoff, an associate professor at the University of British Columbia, noted a drop in high-end home prices after the foreign buyer ban was first introduced in 2022. However, he attributed this more to rising interest rates than the ban itself.
"The most affordable products actually rose in price for whatever reasons after the foreign buyer tax," he said.
Davidoff argued that the loss of foreign buyers could also reduce rental stock, as many such investors choose to rent out their properties. As a result, more people might opt to own rather than rent, which, according to Davidoff, would have “a pretty small impact on affordability either way.”
As we await any potential long-term consequences of this policy, Canadian property managers can explore renting options for newcomers who are unable to buy property themselves.
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