Foreigners are now banned from buying property in Canada

A ban on foreigners buying residential property in Canada took effect on Sunday, aiming to make more homes available to locals facing a housing crunch.Several exceptions in the act allow individuals such as refugees and permanent residents who are not citizens to buy homes.

In late December, Ottawa also clarified that the ban would apply only to city dwellings and not to recreational properties such as summer cottages.The temporary two-year measure was proposed by Prime Minister Justin Trudeau during the 2021 election campaign when soaring prices put home ownership beyond the reach of many Canadians.

The law was passed by the Canadian government as home prices surged after the start of the pandemic. As per the report, some politicians also believed that buyers were responsible for snapping up the supply of homes as investments.

Why are property rates increasing?

Canadian Bank is also responsible for price hikes as they are raising the interest rates, resulting in higher mortgage rates in the country, just like in the United States and other countries that have been hiking rates.CREA's price index is still up 38 per cent from the end of 2019, before the pandemic, but the group said that the inventory of homes for sale has returned to pre-pandemic levels, as reported by CNN Business.The real estate association voiced concern about the law, even with the exemptions for people who intend to move to Canada. In a statement, the group said that Canada has built a reputation as a multicultural nation.The Bank of Canada has been raising interest rates, resulting in higher mortgage rates in the country.

Who can and cannot buy a house in Canada

Purchasing a home in Canada may now be a distant dream for foreign investors, at least for some time. The country has reportedly imposed a ban on residential properties being sold to foreigners as investments.A new Canadian law took effect on January 1. The law essentially bans foreign buyers from buying residential properties as investments for two years, CNN Business reported.The law comes amid surge in property prices since the start of the pandemic. Politicians believe foreign buyers were responsible for snapping up the supply of homes as investments.However, the new ban has an exception for immigrants and permanent residents of Canada, who are not citizens.The desirability of Canadian homes is attracting profiteers, wealthy corporations, and foreign investors, the campaign website of Prime Minister Justin Trudeau's party had stated in the past year. “This is leading to a real problem of underused and vacant housing, rampant speculation, and skyrocketing prices. Homes are for people, not investors,” it read.According to the Canadian Real Estate Association (CREA), average home prices in Canada peaked just above $800,000 Canadian in February and have fallen steadily since then, dropping about 13 per cent from that peak, the CNN reported.