Canada bans foreigners from buying property, but with conditions

If you are planning to relocate to Canada, or more importantly, if you are planning to buy a new home in Canada, know this: It is banning most foreigners from buying property in the country.

What? As a New Year gift, that no investor wanted, the government of Canada law came into effect on January 1, 2023.  The law restricts most foreign buyers from properties for investment for the next two years.  

But , why? The Canadian government had to implement the law as the housing prices have been skyrocketing since the outbreak of the Covid pandemic. There are two possible reasons for this, apart from Covid-19: 

According to various media reports, several lawmakers thought that investors (who own only 5% of houses by the way) were responsible for snatching up the supply of properties for investment purposes. So, this was done in order to make homes more affordable for people who live in the country.
 

Another reason: The Bank of Canada has been raising interest rates, resulting in higher mortgage rates in the country. The rise in the hike of properties has been a real crunch problem in Canada and several ministers have voiced their concerns against it.   

The surge in property prices has been a major source of worry for Canadian citizens, with various ministers expressing their opposition.

According to the Canadian Real Estate Association (CREA), the average home price in Canada in February 2022 surged above $800,000 (Rs 4,88,47,472)!

But, it is not all bad. Here's what the data says: 

According to the data by CREA, since February, the prices have declined 13%, but yet really far away (almost 38% up) to reach the pre-pandemic level.

According to experts, Canada needs more construction to fulfill the increasing demands of suppliers, rather than banning investors from buying properties. 

What are the exceptions: 

• The new ban has an exception for immigrants and permanent residents of Canada, who are not citizens.
• In late December, Ottawa also clarified that the ban would apply only to city dwellings and not to recreational properties such as summer cottages.

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