Two-year ban on foreign homebuying comes into effect in Canada

In Cana­da, a law has come into force bar­ring some for­eign­ers from buy­ing homes for two years.

The ban is aimed at eas­ing one of the world’s most afford­able hous­ing markets.

As of this sum­mer, the medi­an home price in Cana­da was C$777,200 (US$568,000), more than 11 times the medi­an after-tax house­hold income.

Crit­ics say it is unclear how the ban will affect the Cana­di­an hous­ing market.

Less than 6% of home­own­ers are non-Cana­di­an in Ontario and British Colum­bia, which have the high­est home prices nationally.

Begin­ning Jan­u­ary 1, non-Cana­di­an cit­i­zens or per­ma­nent res­i­dents will be pro­hib­it­ed from pur­chas­ing res­i­den­tial prop­er­ty, and vio­la­tors will be sub­ject to a $10,000 fine.

The Cana­di­an gov­ern­ment announced some exemp­tions from the rule in late Decem­ber, 11 days before the immi­gra­tion ban went into effect, includ­ing for inter­na­tion­al stu­dents who have been in the coun­try for more than five years, asy­lum seek­ers, and those with tem­po­rary work permits.

Fed­er­al Hous­ing Min­is­ter Ahmed Hussen said in a state­ment that the ban was intend­ed to curb buy­ers who see hous­ing as a com­mod­i­ty rather than as a place to raise a family.

“Through this bill, we are tak­ing steps to ensure that homes are owned by Cana­di­ans for every­one liv­ing in this coun­try,” said Hussen.

Cana­di­an house prices have fall­en slight­ly in 2022, but are still much high­er than they were a decade ago.

Com­pared to 2013, when the medi­an home price was C$522,951, it was up 48% last year.

Mean­while, Cana­di­an medi­an house­hold income is strug­gling to keep up with ris­ing house prices. The lat­est data show that medi­an after-tax house­hold income grew by 9.8% from 2015 to 2020.

Sta­tis­ta’s analy­sis of the rela­tion­ship between house prices and income found the Cana­di­an hous­ing mar­ket to be one of the most inac­ces­si­ble in the world, ahead of New Zealand, the US and the UK.

Canada’s two largest cities, Toron­to and Van­cou­ver, have medi­an home prices in excess of C$1 mil­lion and are often ranked among the ’10 most inac­ces­si­ble cities in the world’.

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