The federal government is extending its ban on buying foreign homes in Canada, Finance Minister Chrystia Freeland announced in a press release on Sunday.
The rule, which was first announced in 2022, will now be extended until early 2027. It prohibits foreign nationals and commercial businesses from purchasing residential property in Canada, with exceptions for certain international students, asylum seekers and temporary workers.
“By extending the ban on foreign buyers, we will ensure that homes are used as housing for Canadian families and do not become a speculative financial asset class,” Freeland said in a statement Sunday.
Experts question whether the ban has a significant effect on housing affordability in Canada, given the relatively small share of the overall real estate market owned by non-Canadians. In 2020, for example, the market share held by non-residents in some measured provinces ranged between 2 and 6 percent.
In 2021, in British Columbia, only about 1.1. percent of home sales included a foreign buyer.
There are also other exemptions to the home purchase rules that allow the purchase of buildings with four or more residences, or in certain less populated areas.
Brendon Ogmundson, chief economist of the BC Real Estate Association, told CBC News late last year that “the ban on foreign buyers was more political than economic policy or housing policy.”
Some provinces in Canada had already implemented taxes on foreign home buyers, while Toronto recently proposed a municipal levy on non-Canadian residential purchases.
Housing has become a major political flashpoint as Canadians face a serious affordability crisis. The Canada Mortgage and Housing Corporation (CMHC) says that, on top of projected growth, an additional 3.5 million homes will need to be built by 2030 to become affordable.
Conservative Leader Pierre Poilievre has made the housing crisis a key part of his political criticism of the ruling Liberals, saying the country has fallen into “housing hell.”
He proposed a series of measures to help boost housing starts, including a series of incentives to reward municipalities that meet ambitious housing goals with federal dollars, and punish those that don’t.
The federal government responded to the crisis with a number of measures, including a series of negotiations with major cities, to tie federal Housing Acceleration Fund money to zoning reform and other changes policy favorable to construction at the municipal level.