Vecteezy.com
Canada's foreign buyer ban is meant to help protect local home buyers by making it more difficult for foreign buyers to purchase property in the country. The ban applies to all home purchases in certain areas, and it requires foreign buyers to provide proof of residency in Canada in order to purchase a property. This is intended to help to ensure that local buyers are not outbid by foreign investors and that the local housing market is not adversely affected by an influx of foreign capital. The ban also puts a limit on the amount of investment a foreign buyer can make in Canada.
The ban could have a positive effect on local homebuyers, as it could make it easier for them to purchase a home. If the ban reduces the demand for housing from foreign buyers, it could result in lower prices for local homebuyers. Additionally, it could make it easier for local homebuyers to get financing, as banks may be more willing to lend to local buyers if they know they are not competing with foreign buyers.
At the same time, the ban could have some negative consequences. For example, it could make it more difficult for foreign investors to deploy their capital in Canada, which could lead to a loss of investment in the country. If this loss of foreign capital leads to a slow down in housing development it could also lead to an overall decrease in housing supply, as foreign buyers may be less likely to purchase and develop land into new homes and housing developments. If this happens it could lead to higher prices for local homebuyers provided that demand for housing outpaces new and existing supply. This point cannot be stated enough. When it comes to foreign buyers, a common assumption is that this is tied exclusively to wealthy investors who intend on purchasing houses and condos as a place to park their capital without any real intention of living there. Although it's true that this is part of the equation, and has been a real problem for major urban centers like Vancouver and Toronto, it's not the whole story. Many of these foreign investors are looking to actually make money from their investment, rather than simply park their capital somewhere where it will accrue a variety of costs from maintenance and strata fees to property taxes and other special taxes (i.e. the empty homes tax, and the foreign buyers tax). One of the more effective ways to do this with real estate is to purchase empty land, and low density land consolidations, and convert this property into more homes that can be sold to local Canadians. This is a profitable endeavor for developers and investors, while also being a market solution to the need for more housing.
Although it’s impossible to know for sure what the overall impact will be, I personally doubt that the foreign buyer ban will do much to help local home buyers. In BC foreign buyers accounted for less than 0.5% of residential housing sales volume in 2022. Therefore, it seems pretty unlikely that this new policy will have any real positive impact on housing affordability. Instead this seems to be more of a political move intended to poll strongly among populists and generate good press without necessarily achieving its intended aim.
Overall, Canada's foreign buyer ban is meant to help protect local homebuyers by making it more difficult for foreign buyers to purchase property in the country. However it’s unclear if this will work, and it could actually have the opposite effect.
I am a Victoria based local realtor with eXp Realty. My commitment to honesty, integrity, loyalty and hard work have been important pillars for me because they drive a high standard of excellent service for my clients. Helping you realize your dream is my goal!
I service Vancouver Island, but my focus is on: Victoria, Sooke, Saanich, Malahat, Shawnigan Lake, Cobble Hill, Duncan, and the rest of the Cowichan Valley.