Well, 2022 is history and 2023 is already here. This year promises to be just as challenging and demanding for everyone, not just those of us who follow real estate and financial markets closely.
Speaking of real estate, the year started with the coming into force on Jan 1, 2023, of the Canadian federal government’s Purchase of Residential Property by Non-Canadians act, resulting in a ban on foreigners buying Canadian residential properties. Here are some of my quick thoughts on this:
- The supposed goal of this act is to help ease one of the most unaffordable housing markets in the world. As others have commented, the actual likelihood of this happening is remote. That’s the TLDR version.
- The reasons why this measure might not really help much in Canada and particularly Ontario and GTA are not for the usual reasons one might think – foreign home ownership is NOT exactly insignificant as was being claimed till recently (and even now in some circles). For e.g., CMHC’s 2019 report showed 19.2% of condos constructed in 2016-107 in Vancouver had at least one non-resident owner. That number was 10% for Toronto. Not exactly numbers one can ignore, though to be fair those numbers might have come down at least slightly, in later years.
- A main reason that immediately comes to mind on why this “ban” won’t really matter much, particularly in Ontario and GTA is that Ontario already has measures in place to deter non-residents from buying property in the province. The Ontario non-resident tax introduced in 2017 currently stands at 25%. This tax, although lower when introduced, didn’t put much of a dent in the 2020-2021 rally.
- Some of the other reasons are the exemptions baked into this ban, which might be used to circumvent it if one is determined enough. There are other reasons but will leave it at that for now.
While on the issue of affordability, the other popular narrative regarding the lack of supply of housing being a main cause, also has several experts questioning it. Will cover that another time.
Let me know what you think. Has anyone here been affected by this ban with foreign clients not being able to buy? Particularly in GTA? Please do comment here or DM me. Thank you.
