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By Geoffrey Morgan
Canada has lengthened a ban on foreign home buyers for two additional years as the real estate market begins to show signs of a rebound, stoking concerns about the cost of shelter in cities like Toronto and Vancouver.
Prime Minister Justin Trudeau’s government acted to prohibit non-Canadians from buying residential real estate in 2022, with the measure to expire on Jan. 1, 2025. That date has now been moved to Jan. 1, 2027.
“By extending the foreign buyer ban, we will ensure houses are used as homes for Canadian families to live in and do not become a speculative financial asset class,” Finance Minister Chrystia Freeland said in a statement Sunday, adding that the government is concerned about residents being priced out of their local housing markets.
The government has carved out exemptions for non-Canadians buying vacant land or residential property for development. There are also exemptions for foreign students and people on work permits, provided they have been in the country for an extended period and have not already purchased property.
Activity in the housing market has begun to heat up recently as it becomes clearer than the Bank of Canada may be in a position to cut interest rates later this year.
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The national benchmark home price in December was C$730,400 ($542,500), an increase of 36% in five years. It’s C$1.2 million in greater Vancouver and C$1.1 million in greater Toronto.
Read More: Homebuyers Are So Frenzied They Won’t Wait for Canada Rate Cuts
Multiple levels of government in Canada have adopted measures aimed at cooling housing costs. This week, Toronto city council will consider a motion to tax the home purchases of non-residents at a rate of 10% of the property value. That’s in addition to the 25% “non-resident speculation tax” imposed by the province of Ontario.
Toronto Mayor Olivia Chow’s office did not immediately respond to a request for comment Sunday.
The motion to be considered Feb. 6 is intended to “maintain a level of affordability in the residential real estate market by discouraging international buyers from purchasing property in the City of Toronto, particularly those buyers who do not intend to live in the property,” according to a recommendation by the city’s executive committee.
