Canada Bans Foreigners From Buying Homes; Exempts Immigrants With Permanent Residency Rights

Following a spike in property prices in Canada, the government has now banned foreigners from buying residential properties, according to a report by CNN Business. The rationale behind this law, provided by the government, is that since the start of the pandemic, buyers have latched onto homes as an investment avenue.

This move is not a consequence of recent developments, the idea had been brewing inside Canadian Prime Minister Justin Trudeau’s head since the 2021 election campaign. His campaign’s website had written that the desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors which is "leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices".

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“Homes are for people, not investors," Trudeau’s campaign had said.

As relief for immigrants who are permanent residents of Canada, the law makes exempts them from the ban, CNN Business reported.

However, the skyrocketing prices of homes was already showing signs of cooling off. In 2022, the price rise had actually reversed, ANI quoted Canadian Real Estate Association saying. The association’s data showed that home prices peaked in Canada around US $800,000 in February, 2022. Since then the prices have come off highs by 13 per cent.

A part of the cause of property prices rise is also the rate hiking by Canadian Central Bank. Central banks across the globe have been raising interest rate to curb inflation, Canada is no outlier.

Although the price index of Canadian Real Estate Association is up 38 per cent from the pre-pandemic level in 2019, the group has informed that their inventory of home sales has returned to pre-pandemic level, according to CNN Business.

The Association has also raised concerns about the law, even with the exemption provided to people who intend to move to Canada. They said, in a statement, that Canada has built a reputation as a multicultural nation.

"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. Further calling the potential benefits of the ban “modest".

CREA raised another concern saying such a move from Canada may prompt the United States and Mexico to retaliate similarly. That will apparently affect retirees looking for winter homes away from the chilly climes of Canada, according to CREA, reported CNN Business.

The group has also informed that they purchase a lot of properties in several countries, especially the US. A similar ban by the US could be a major concern, said CREA, as Canadians are the largest foreign purchasers of American properties. Half of the properties purchased by Canadians are in Florida and Arizona.

"These provide Canadians with a place to spend the winter months and are a form of savings for Canadian retirees," said the group. "If Canada places a ban on Americans owning property in Canada, we should expect them to respond in kind," CREA warned.

(With agency inputs)