A year ago, the federal government imposed a ban on foreigners buying real estate with the passage of the Non-Canadian Residential Property Purchase Prohibition Act. The ban, which came into effect on January 1, prohibited non-Canadian citizens, non-permanent residents, and foreign-controlled companies from purchasing Canadian real estate as an investment.
Critics argue that the foreign- home purchase ban, intended to make housing affordable for Canadians, had many exceptions and was more of a political maneuver. They say it is clear that housing remains unaffordable for many Canadians and that the country should look to other countries to find strategies to promote home ownership.
A spokesman for the housing minister said the government is working with cities across the country to help "build more than 250,000 new homes over the next decade." In an email, the Canada Mortgage and Housing Corporation (CMHC) said 2023 data from the Canada Housing Statistics Program is not yet available to determine the full impact of the ban. CMHC said Ottawa is “working to ensure that every Canadian … has affordable housing,” citing moves to eliminate the GST on newly built rental homes, $20 billion in apartment financing, and other initiatives.
Late last month, Deputy Prime Minister Chrystia Freeland said the ban “does good” by preserving housing that people can live in.
Earlier in November, Conservative Leader Pierre Poilievre said that rather than helping make housing affordable, the government’s policies “made the problem worse.”
The housing minister acknowledged the housing crisis earlier this month, but disputed Poilievre’s strategy. “It seems like he’s exploiting Canadians’ anxiety without putting forward a plan that will actually help them,” Fraser said.
Exemptions soften the ban According to CMHC data, only 2% of real estate purchases in 2021 were made by non-Canadians, according to records obtained by Global News through its Access to Information program.
A few months after the ban was introduced, additional exemptions were added. These include students, first-time buyers, and properties priced under $500,000.
Any impact of the ban was short-lived, according to Brendon Ogmundson, chief economist at the British Columbia Real Estate Association. “The ban on foreign buyers was more political than economic or housing,” he said. Toronto's market has softened this year, but the average home price still stands at $1.1 million, while the typical Vancouver home price in September was $1.2 million, according to the Toronto Regional Real Estate Board (TRREB) and the Canadian Real Estate Association (CREA). Even though home sales in Canada fell in October, the average sale price was up 1.8 per cent compared to the same period in 2022, according to CREA.
Some success British Columbia introduced a speculation tax and a vacant home tax. Ontario followed suit the next year. These taxes were introduced in high-demand areas to discourage people from buying property as an investment.
The federal government is taking many provincial measures to encourage transit-oriented and multifamily development, the housing minister said. Canadian ban 'full of holes,' say critics
Those who favor taxes and bans say they need to be tougher to work.
"The Canadian ban was full of holes," says Andy Yan, director of the City Program, a continuing education program on urban planning and development at Simon Fraser University. "I would tell people it's more like a napkin than a duct tape."
Yan says cities like Hong Kong and Singapore are using much higher taxes and tough buyer restrictions to keep prices down.
He and other housing experts point out that the ban on foreign buyers was in place long ago, after speculation taxes had already scared off out-of-town property investors. Stagnating wages, a shortage of affordable housing, and a failure to attract global real estate investors due to weak regulation are all contributing to the housing affordability problem, according to David Ley, author of The Big Cities Housing Boom.
The retired UBC urban geography professor believes Canada could learn from Singapore, which in 2022 had one of the world's highest homeownership rates, at 89%.
"Singapore has solved its housing problem. How many cities in the world can we say that about?" Ley asks.
He attributes Singapore's success to aggressive speculation taxes — 60 percent compared to 25 percent in British Columbia — and the use of those taxes to create powerful sovereign wealth funds.
Olga Balaur