As of 1 January 2023 a new Canadian law came into effect forbidding foreigners from buying residencies in the country. The Prohibition on the Purchase of Residential Property by Non-Canadians Act, part of Prime Minister Justin Trudeau’s re-election campaign in 2021, was approved in 2022 and entered into force at the beginning of this year.
The move aims to stabilize real estate prices in the country, one of the most expensive in the world for buying a house. “The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors”, said Trudeau’s party campaign website last year, according to CNN. “This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors.”
We will work with provinces and municipalities to develop a framework to better regulate the role of foreign buyers in the Canadian housing market so that this money does not deter housing from being available for, and used by, Canadians.Liberal Party of Canada
Immigrants and refugees are exempt from the new law, so are non-Canadians who buy a property together with a spouse or legal partner that has Canadian citizenship or is a permanent resident. Although unclear from the text of the law, the Liberal Party’s website says people whose “purchase is confirmed to be for future employment or immigration in the next two years” are also allowed to buy a house.
The Canadian Real Estate Association (CREA) shows that, after peaking in February 2022 at just over 800,000 Canadian Dollars (about 560,000 euros), the average price for a property has dropped by 13%, but is still 38% more than before the pandemic. However, the association believes the “potential benefits of the ban are likely to be modest”.
If Canada places a ban on Americans owning property in Canada, we should expect them to respond in kind.The Canadian Real Estate Association
Moreover, CREA fears the new law will affect Canada’s reputation as a “multicultural nation that welcomes people from around the world. Besides changing perspectives of Canada as welcoming, the ban could prompt other countries to implement similar restrictions.
“Canadians purchase vacation and residential properties in many countries, but particularly in the United States”, said CREA, explaining that Canadians are the largest foreign purchasers of American properties, over half of these residencies being in Florida and Arizona. “These provide Canadians with a place to spend the winter months and are a form of savings for Canadian retirees. If Canada places a ban on Americans owning property in Canada, we should expect them to respond in kind”, the association warned.