OTTAWA — The federal government will continue to ban foreign nationals from buying homes in Canada for another two years as housing affordability concerns continue to trouble cities across the country.
Finance Minister Chrystia Freeland made the announcement on Sunday, saying Canada is extending its foreign homebuyer ban up until 2027.
Under the ban, which first came into effect in 2023, foreign commercial enterprises and people who are not Canadian citizens or permanent residents are prohibited from buying residential property either directly or indirectly. The ban carries the potential for fines of $10,000 for violations.
Officially known as the Prohibition on the Purchase of Residential Property by Non-Canadians Act, the ban was meant to take some pressure off home prices amid an affordability crisis only made worse by the rising cost of living brought on by inflation and elevated interest rates.
The act was amended after its initial introduction to allow non-Canadians to purchase a residential property in certain circumstances.
At the time, then housing minister Ahmed Hussen said the amendments “strike the right balance in ensuring that housing is used to house those living in Canada, rather than a speculative investment by foreign investors.”
One of the amendments introduced allows those holding a work permit or who are authorized to work in Canada to purchase residential property while working here.
The initial foreign homebuyer ban was set to expire on Jan. 1, 2025. Freeland said in a statement yesterday that the extension will ensure houses are used for homes for Canadians and families and do not become a speculative financial asset class.
She said the government plans to use all tools possible to make homes more affordable across Canada.
Housing prices have soared over the Trudeau government’s term in office, which, combined with now high interest rates, has pushed the cost of home ownership out of reach for many people.
Statistics Canada numbers from 2021 show the number of people aged 25 to 29 who owned their home fell 10 percentage points between 2011 and 2021. An Ipsos poll conducted last spring found that 63 per cent of people who don’t currently own a home have given up on the idea that they ever will.
Rents have also skyrocketed, especially since the pandemic. The vacancy rate for purpose-built rental apartments hit its lowest level last year since data collection began in 1988, as strong demand and “vastly insufficient” supply combined to send rents surging, according to a report last week from Canada’s national housing agency.
The average rent for two-bedroom, purpose-built rental apartments in the 17 Census Metropolitan Areas surveyed by Canada Mortgage and Housing Corporation jumped eight per cent to $1,359 from $1,250 in the past 12 months, after rising 5.6 per cent the previous year, the report found.
Rental prices surged across major cities, with Calgary and Edmonton experiencing the sharpest increases at 14.3 per cent to $1,695 and 6.4 per cent to $1,398, respectively. Toronto ($1,940), Montréal ($1,096) and Vancouver ($2,181) also reported substantial upticks in rental costs.
The overall vacancy rate dropped to a low of 1.5 per cent. Vancouver retained its position as Canada’s tightest major rental market with a vacancy rate of 0.9 per cent, while Calgary and Toronto tied for second. Factors contributing to Calgary’s tight rental market included heightened interprovincial migration and international migration.
Conservative Leader Pierre Poilievre had made housing a major issue for his party, releasing a 15-minute documentary on the topic and putting a private member’s bill, the “Building Homes Not Bureaucracy Act,” before the House of Commons. He said in his documentary that the situation needs to be addressed.
“An entire generation of youth now says they will never be able to own a home. That is not normal in Canada,” he said.
Additional reporting from National Post
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