Several exceptions in the law allow individuals such as
refugees and non-citizen permanent residents to buy homes.
In late December, Ottawa also specified that the ban would
only apply to urban housing, but 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 skyrocketing
prices put home ownership out of reach for many Canadians.
"The desirability of Canadian housing attracts
speculators, wealthy corporations and foreign investors," his Liberal
Party said in its campaign plan at the time.
"This leads to a real problem of underutilized and
vacant housing, rampant speculation and skyrocketing prices. Housing is for
people, not investors," Trudeau said.
After winning the 2021 election, the Liberals quietly
introduced the Ban on Non-Canadians Buying Residential Property Act.
Major markets such as Vancouver and Toronto have also
introduced taxes on non-residential properties and vacant homes.
Despite the recent boom, the country's real estate market
cooled for sellers as mortgage rates followed the Bank of Canada's aggressive
monetary policy in an effort to curb inflation.
Median home prices fell from a peak of more than C$800,000
(US$590,000) in early 2022 to just over C$630,000 (US$465,000) last month,
according to the Canadian Real Estate Association.
Many experts said the ban on foreign buyers - who according
to the national statistics agency account for less than five per cent of homeownership
in Canada - would not have the desired effect of making housing more
affordable.
Rather, they point to the need for more housing to meet
demand.