Budget proposes to keep measure in place until the start of 2029, but exempt new residential properties
The federal government has proposed an extension of the ban on non-resident foreign homebuyers for a further two years, but says it would exclude new residential properties from the policy.
Thursday’s federal budget revealed that the government intends to renew the measure until January 1, 2029 – but the proposed amendment has sparked speculation that it may be attempting to drum up purchase activity in the preconstruction sector, where investor demand has plunged in recent years.
Extending and adjusting the measure, the government said, “would help protect housing affordability by keeping the vast majority of the market available for Canadians, while unlocking additional investment in new housing supply.”
The government said it would support other policy measures to address housing market pressures “including speculation” and unveiled separate housing proposals including billions in additional funding for housing.
Finance minister François-Philippe Champagne’s statement also included a pledge to introduce more affordable mortgages, a proposal that will spur plenty of debate in the mortgage industry.
The budget said it was “establishing new regulations to enhance publicly available information on insured mortgage rates, allowing more Canadians to compare and shop for the best available rates.”
Its proposed investment in housing will total an additional $44.7 billion over the next 11 years, which it claimed would end homelessness within a decade and build a more affordable housing market.
Homebuyer ban a hot-button industry issue
The ban on non-resident buyers was first proposed during the federal election campaign in 2021 and enacted by then-prime minister Justin Trudeau, coming into force at the beginning of 2023.
It’s won wide support within the mortgage industry, although the housing market slowdown of recent years has seen prominent real estate professionals call for the government to scrap or amend the policy.
Last year, a Research Co. poll showed around 76% of Canadians support the measure, but National Bank of Canada (NBC) chief economist Stéphane Marion recently argued that the ban is detrimental to Canada’s efforts to attract more foreign investment.
“How can you pretend to be a standout investor again if you tell foreign buyers you can’t touch the residential market in Canada?” Marion said.
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