Policymakers face a big call at the beginning of 2027
Geopolitical chaos, rising oil prices, and the US-Canada trade war remain some of the biggest factors currently impacting the national housing market – but the federal government is facing a housing dilemma of another type in the months ahead.
Canada’s ban on non-resident foreign homebuyers, introduced by then-prime minister Justin Trudeau in 2022 and extended for another two years in 2024, is set to expire on January 1, 2027, with no indication yet of whether policymakers plan to extend or scrap the measure.
The policy was first proposed during the 2021 federal election campaign amid the COVID-era housing market boom, when skyrocketing home prices and fierce bidding wars pushed affordability hopelessly out of reach for scores of buyers.
The mortgage industry appears to favour keeping the policy in place, with 58% of respondents to a recent Canadian Mortgage Professional survey indicating they thought it should stay.
But an analysis by law firm Borden Ladner Gervais LLP (BLG) suggested that the government could tweak the ban rather than renewing it outright, citing comments by housing minister Gregor Robertson that offshore capital can still play a role in the national housing market.
Some industry members in favour of adjusting ban
Among the mortgage industry members who favour amending the measure outright is Toronto-based Donaldson Capital mortgage broker and principal Drew Donaldson (pictured below), who said the market should be opened to buyers based in the US.
“I think it should be lifted,” Donaldson told Canadian Mortgage Professional. “Does the US ban Canadians from buying in Florida or Arizona? No, they don’t, and if anything, at least make an exception for our neighbours in the South.”
With Toronto’s condo market still reeling from a years-long slowdown, Dominion Lending Centres Group (DLCG) chief economist Sherry Cooper also believes opening the door to US buyers would be the right move.
She told CMP in February of this year that she favours relaxing or removing the ban on non-resident foreign buyers.
“Look at the Americans that would be very interested in having a second property in Canada, particularly given how they feel about what’s going on in the US,” she said. “Why shouldn’t those people be able to buy a property in Toronto that’s been listed on the market for 18 months?
“It just makes no sense to prohibit that activity, especially now that we have a glut as opposed to a shortage.”
One factor could strongly influence the government in its approach to the issue: namely, the fact that a strong majority of Canadians still support the ban.
Home affordability improved in 10 of 13 major markets last month, according to a new Ratehub.ca analysis, but buyers are still grappling with a challenging outlook across the country thanks to rising interest rates and economic uncertainty.
About 76% of Canadians said they supported the federal foreign buyer ban in a Research Co. poll last year, with no sign that there’s been a significant shift from that consensus in 2026.
What could a revised ban look like?
If the government opts to amend the measure instead of renewing it without a change, the BLG analysis suggested it could look to Australia, which allows some exceptions for purchases by foreign buyers.
Non-resident foreign investors are still permitted to buy vacant land and newbuilds, while purchases for redevelopment supporting the availability of housing on a commercial scale and investments that increase housing stock by more than 20 units are also allowed.
Has the ban worked?
In August, Missing Middle Initiative economist and founding director Mike Moffatt told CTV the ban had had little to no impact on the housing market.
He indicated much of the damage to housing affordability had already been done by the time the measure was introduced in 2022.
“This was a nationwide rule designed to address problems in two small parts of the country [Toronto and Vancouver],” he said, “and probably came a few years too late to really accomplish much of anything.”
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