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Why Experts Say the Foreign Buyer Ban Isn't Working

In the news

On January 1, 2023, Canada’s foreign buyer ban took effect, with the intent of slowing down the progression of Canada’s housing crisis issue.

However, some experts believe that the foreign buyer ban isn’t working.

Who does the foreign buyer ban effect?

The ban prohibits non-Canadian citizens or permanent residents from buying residential properties in the country, with a $10,000 fine for those found in breach.

However, there are some exemptions for international students, individuals on temporary work permits, and refugee claimants.

Furthermore, some have pointed out that there are loopholes in the ban that foreign buyers can easily exploit.

Will a $10K fine deter foreign investment?

Let’s consider the latest figures for the average price of a home in Canada.

CREA’s national price map, which can be found by clicking here, shows that the national average home price as of January 2023 is $612,204.

If we take a look at the two most popular provinces for foreign investment and immigration from statista.com, we can see that Ontario is the overwhelming favourite location, with BC following in second place.

The average home price for Ontario in 2023 is $798,835, while BC’s is $867,012.

Even when we only consider the lower cost at the national average, a $10,000 dollar fine is not much of a deterrent from foreign investment.

Experts believe that the ban is purely symbolic and doesn’t address the real issue

William Robson, CEO of the C.D. Howe Institute, believes that the two-year ban on foreign non-resident buyers in Canada's housing market is unlikely to solve the country's housing crisis.

Robson described the ban as a symbolic gesture that will have little impact, in his interview with CMP which can be found by clicking here.

Throughout the interview, Robson expands on his position and states that the primary reason for his disbelief in this move from the federal government, is that the ban still fails to address the main issue in Canada’s housing market, which is a lack of inventory.

What do experts believe will solve the issue?

Robson, like many other experts who have their fingers on the pulse of the housing crisis, recommends that the government work on increasing the supply of housing to address the current shortage in inventory.

We’ve already seen provincial leaders from across the country put new policies in place to speed up the approval process for housing developments, and it’s fair to speculate that more aggressive moves in this nature will continue to unfold.

What Should Canadians with a Goal of Home Ownership Do For Now?

The best thing you can do as a Canadian with the goal of home ownership in the future is to speak with a mortgage professional to plan your path forward.

By speaking with a mortgage pro from Sherwood, you can take stock of where you’re at, and we’ll help you make adjustments to help you reach your goals faster!

As more homes begin to become available across the country, you’ll benefit from being approval ready, so give Sherwood a call at 1-(877)-241-6001 to get started today!

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