Canada to ban most foreign home buyers in bid to rein in soaring property market

The two-year ban will apply to most foreign buyers, with exemptions for students, permanent residents and foreign workers

Canada will put a two-year moratorium on most foreign buyers from purchasing homes in the country as part of a federal initiative to rein in a too-hot housing market.

While delivering the federal budget in Ottawa’s House of Commons on Thursday, Finance Minister Chrystia Freeland announced the new measure as part of the minority Liberal government’s attempt to tackle the country’s affordability crisis.

The budget proposal unveiled will also include additional programmes, including as billions set aside for new construction of low income housing and a tax-free savings account for first-time home buyers.

All of this is part of an overarching goal set up by the government in the hopes that it will get more Canadians on the property ladder, something that has only become less achievable throughout the Covid-19 pandemic with the average price of homes shooting up 20 per cent in the past year.

Though the affordability crisis has been an ongoing problem in the North American country for years, the national average home price hit a record $816,720 (£497,490) this past February, a number that’s more than nine times most citizens’ household income, the Canadian Press reported.

An additional feature of the newly announced budget initiative is a rule that will place a higher tax on people who sell a home within a 12 months of taking ownership.

Bloomberg reported that there will be exemptions in place for this two-year ban, as it won’t apply to foreign workers, students, or permanent residents of Canada.

Canada isn’t the first country to attempt to cool off a too-hot housing market by starting with banning foreign buyers.

In 2018, New Zealand banned most foreigners (excluding Australians and Singaporeans due to free-trade deals) from buying existing properties in the country.

There were, similarly to Canada, exceptions to this ban, including one where foreigners would still be permitted to make restricted investments in new developments or apartment buildings.