OTTAWA: On Sunday, a law that prohibits foreigners from purchasing residential property in Canada went into effect with the intention of providing more homes to locals who are experiencing a housing shortage.
The act contains a number of exceptions that permit non-citizens to buy homes, such as refugees and permanent residents.
In addition, Ottawa made it clear at the end of December that the restriction would only apply to city dwellings and not to recreational properties like summer cottages.
During the 2021 election campaign, Prime Minister Justin Trudeau proposed the temporary two-year measure at a time when rising home prices had made homeownership unaffordable for many Canadians.
His Liberal Party's election plank at the time stated, "The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors."
"A real problem of underused and vacant housing, a lot of speculation, and skyrocketing prices are the results of this. Investors should avoid buying homes."
The Liberals quietly introduced the Prohibition on the Purchase of Residential Property by Non-Canadians Act following their victory in the 2021 election.
Non-residents and vacant homes have also been subject to taxes in major markets like Toronto and Vancouver.
Regardless of a new prime, the country's housing market has cooled for dealers as home loan rates followed the Bank of Canada's forceful money related strategy in a bid to get control over expansion.
The Canadian Real Estate Association reports that the average price of a home has decreased from more than Can$800,000 (US$590,000) at the beginning of 2022 to just over Can$630,000 (US$465,000) this past month.
According to the national statistical agency, foreign buyers, who account for less than 5% of home ownership in Canada, would not have the desired effect of making homes more affordable, according to numerous experts.
Instead, they say that more homes need to be built to meet demand.
In a June report, the national housing agency Canada Mortgage and Housing Corporation stated that close to 19 million housing units will be required by 2030.
It stated that to meet that demand, 5.8 million new homes must be constructed, or 3.5 million more than are currently anticipated to be constructed.