- A new law in Canada prohibits foreign investors from purchasing homes in the country for two years, starting January 1, 2023.
- The law includes exceptions for immigrants and permanent residents who are not citizens.
- The Canadian Real Estate Association (CREA) has expressed concern about the new law, stating that it may impact the country’s reputation as a welcoming nation.
As of January 1, 2023, foreign investors will no longer be able to purchase homes in Canada due to a new law that aims to curb rising home prices and speculation in the country’s housing market.
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The law, which will be in effect for two years, makes exceptions for immigrants and permanent residents who are not citizens.
The decision to enact this policy follows an increase in Canadian home prices since the start of the COVID-19 pandemic, with some politicians blaming foreign buyers for snapping up homes as investments and contributing to underused and vacant housing, speculation, and skyrocketing prices.
However, the steep rise in home prices seen in 2020 and 2021 has already been reversed, with average home prices in Canada peaking at just above CAD 800,000 in February before declining by about 13% since then.
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The Canadian Real Estate Association has expressed concern about the new law, even with the exemptions for those who plan to move to Canada. The association’s price index is still up 38% from the end of 2019, but the group has noted that the inventory of homes for sale has returned to pre-pandemic levels. The Bank of Canada has also been raising interest rates, resulting in higher mortgage rates in the country.
“Canada has built a reputation as a multicultural nation that welcomes people from around the world. As currently proposed, the prohibition on the purchase of residential property by non-Canadians can impact our reputation as a welcoming nation,” said the group’s statement. “The potential benefits of the ban are likely to be modest.”
Just over a week before the ban went into effect, the Canadian government announced a number of exemptions to the regulation. These exemptions apply to international students who have been in the country for at least five years, refugee claimants, and people with temporary work permits.
Federal housing minister Ahmed Hussen stated that the purpose of the ban is to discourage viewing homes as commodities rather than places to live and raise a family. However, the real estate association voiced concern about the law, even with the exemptions for people who intend to move to Canada.
“Canada has built a reputation as a multicultural nation that welcomes people from around the world. As currently proposed, the prohibition on the purchase of residential property by non-Canadians can impact our reputation as a welcoming nation,” said the group’s statement. “The potential benefits of the ban are likely to be modest,” CNN Business reported.
Living in Canada can be expensive for anyone, but it can be particularly challenging for Africans who may have different financial resources or support systems than native-born Canadians or those who have been in the country for an extended period of time.
Furthermore, Africans may face additional barriers due to a lack of credit history in Canada or difficulty obtaining a mortgage.
