Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeNewsReal EstateGarry Marr: It's time to get rid of the foreign buyers ban on housing, but don't expect it to save the marketThe real estate industry has its hopes pinned on the prohibition being gone for goodLast updated 19 minutes ago You can save this article by registering for free here. Or sign-in if you have an account.The Canadian foreign homebuyer ban has affected the entire real estate market, removing investors who have previously helped drive the condominium sector through pre-sales. Photo by Cole Burston/Bloomberg via Getty ImagesIn six months, the federal government’s ban on foreign ownership of Canadian housing expires, and hopes are high in real estate circles that Ottawa will let it lapse.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorMuch has changed in real estate since the Prohibition on the Purchase of Residential Property by Non-Canadians Act was passed in 2022, banning most foreign ownership with some exemptions. It was set to expire on Jan. 1, 2025, but was extended for two years and since then, things have only gotten worse for the housing market.How bad? Research firm Urbanation has said standing inventory in the Greater Toronto-Hamilton Area hit a record high in the first quarter of this year, just 246 newly built units sold in a metro area of about 7.1 million people. For the first time in three decades, no new condo projects were launched in a quarter.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againNationally, the Canadian Real Estate Association said there was some optimism with May sales up 5.5 per cent from April, but they were still down 5.1 per cent from a year ago, and activity in the resale market is nowhere near the peaks of 2022, which drove the call for limits on foreign ownership.The standing inventory has become such a problem that Ottawa and British Columbia are now teaming up on a $1.45 billion initiative to buy 2,200 condos on the market in the province, as part of a subsidized rent-to-own program.Not surprisingly, some are calling it a bailout for a real estate industry that overbuilt.The bigger question is how much the measures — and similar efforts to convert inventory to rental in Ontario — will really bail out the housing industry, which perhaps just needs to let the market run its course. The counterargument is that hitting rock bottom could mean years of nothing getting built, given the time lag between sales of a high-rise and actual occupancy can be years.Robert Kavcic, a senior economist with Bank of Montreal, said it’s hard to discern the impact of the foreign-buyer ban because it’s so incremental relative to the entire housing market.“The biggest picture context is just the whole market correcting, and sales exceptionally weak, and prices falling,” said Kavcic, adding it’s “rounding error” next to the other conditions in the market.He suggests other measures, such as Ontario’s 25 per cent speculation tax on any foreign national purchasing a home has had a larger impact. Toronto also has its own 10 per cent tax on foreign nationals, and British Columbia has a tax as well.“The market was so drum tight and even crowding out a few incremental buyers took some steam out,” said Kavcic, about the taxes imposed around 2017 and still on the books.Kavcic doesn’t think bringing in foreign buyers will do much to close the gap between buyers and sellers, but his consensus is that it “doesn’t hurt” sales, though the market will need a lot more help.None of that is stopping the real estate community from expecting or even demanding the ban on foreign investment lapse.Mustafa Abbasi, president and chief executive of Sotheby’s International Realty Canada, said he understands why the ban was instituted at a time when affordability was an issue.“Extending the ban now would be a mistake,” he said. “The reality is that foreign buyers were never the main reason Canadians were priced out of housing. The factors driving the market are much more complex: interest rates, domestic investor activity, immigration growth, construction costs, taxation, policy uncertainty and overall confidence in the market.”The executive said the ban also sends the wrong message that Canada is not open to responsible investment and will discourage capital coming into the country.Ryan Beedie, president of Vancouver-based Beedie Construction Ltd., said he can understand a ban on existing single-family homes, since they cannot be created again due to land restrictions.“But if the market can respond (to shortages), why would you prohibit foreign investment in your country?” he said. “If there is a response that doesn’t have an effect on other people, it should be permitted. It was a blunt instrument driven by the economics of the time.”He suggests looking at what other jurisdictions, such as Australia, have done. Australia announced last month that it will extend the temporary ban on foreign purchases of established residential dwellings until June 30, 2029. The ban was originally implemented for two years, starting on 1 April 2025.The key difference is around new builds. The Canadian ban affects the entire market and takes out investors who have helped drive the condominium sector through pre-sales.“A modified thought is better than a blunt instrument,” said Beedie, who expects the current Liberal government will have a more thoughtful approach to this. “It doesn’t benefit anyone to have all this unsold product, so if you have some other source of capital to clear that inventory, it would be great.”Andy Yan, an associate professor and director of the City Program at Simon Fraser University, said the current ban already had a number of exemptions, such as those allowing international students and Canadian spouses to buy homes, and thinks that, with the deadline looming, there is time to reconsider something different.He added that there has been significant change in the international marketplace since the ban, including tighter capital controls on money leaving places like China.“I think the bigger issue that comes into play is how does foreign investment into housing affect a residential system and what can we learn from other countries and what they do,” said Yan.The professor points to Singapore, where there are limits on what foreign buyers can purchase, as well as special “stamp taxes” or duties that those buyers must pay on a property.“They can reallocate that revenue towards more affordable housing,” he said. “Perhaps we shouldn’t allow people to park (their money) in residential real estate for free.”A perceived ongoing issue with foreign buyers has been the possibility that, as they would park that money in real estate, they would leave units empty due to various tenancy risks. A study by Tsur Somerville, an economics professor at the University of British Columbia, found the vacant home tax in British Columbia brought 20,000 units to the market.“It did bring units back to the market. And for the foreign buyers ban, the issue is what are the metrics and what has changed internationally,” said Yan, wondering if letting the tax lapse will make any difference.Even developer Beedie said it won’t be a game-changer for the market. “The foreign buyers were not a big percentage of what was happening before,” he said. “They won’t be the saviour, but every little bit helps.”BMO’s Kavcic doesn’t disagree that lifting the ban might help on some level, but it’s not going to solve the housing market.“Pulling all these policy strings speeds up the process,” he said. “You need to clear out excess inventory and bring back demand. But if you’re talking about the condo market, this is a years-long process,” Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.