The Deputy Prime Minister of the Federal Government, Finance Minister Chrystia Freeland, announced the government's extension of the ban on the sale of homes in Canada to foreigners.

The decision, which came into effect for the first time in 2022, will be extended until the beginning of 2027. Under this decision, foreign citizens (i.e., those who do not hold Canadian citizenship or permanent residency in Canada) and foreign commercial institutions are prohibited from purchasing residential real estate in Canada, with exceptions for some international students, asylum seekers, and temporary workers.

“By extending the ban on foreign buyers, we ensure that homes are used as houses for Canadian families to live in, rather than becoming a financial asset class for speculation,” said the Finance Minister in the Liberal government of Justin Trudeau in a statement issued yesterday.

Experts wonder whether the ban has a significant impact on housing affordability in Canada, given that foreign nationals own a relatively small share of the total housing market in Canada.

In 2020, for example, the share owned by foreigners in some provinces ranged from 2% to 6% of the total market.

In 2021, only 1.1% of residential real estate sales transactions in British Columbia, the largest province in Western Canada and Canada’s Pacific coast gateway, involved a foreign buyer.

There are also other exceptions to the federal decision that allow foreigners to purchase buildings containing four or more housing units, or to purchase a home in some low-density areas.

It is noted that in an interview with CBC News last year, the chief economist at the British Columbia Real Estate Association (BCREA), Brandon Ogmundson, said that “the ban on foreign buyers is more political in nature than it falls under economic or housing policy.”

There are Canadian provinces that impose an additional tax on foreign home buyers, such as Ontario, for example, the largest Canadian province in terms of population and economic size.

It is also noted that the executive committee of the City of Toronto, the capital of Ontario and the largest city in Canada, voted last Tuesday in favor of imposing a new municipal tax on foreign home buyers in the city.

The housing issue is gaining great economic and political importance, as Canadians face a severe crisis in the affordability of buying a home to live in.

It is noted that the Canada Mortgage and Housing Corporation (CMHC – SCHL), a federal institution, issued a study in June 2022 stating that Canada needs more than 22 million homes, including an additional 3.5 million units, by 2030 to achieve affordability for all Canadians.