On January 1st Canada’s Foreign Buyer Ban took effect…
This two-year ban will block some foreign buyers from purchasing residential property in Canada. This policy the federal government says is aimed at making housing more affordable.
Non-residents who buy a home in contravention of the ban — or realtors and lawyers who help them — can face a conviction, and be fined up to $10,000. The federal government can also apply to the superior court in the province where the home has been purchased in order to sell the property.
“I think this is very much a political policy, more than an economic policy,” says Brendon Ogmundson, chief economist at the British Columbia Real Estate Association.
This controversial policy has critics skeptical. Many real estate and housing policy experts are unconvinced that the two-year ban will have much impact on house prices — given non-resident buyers make up such a small share of the real estate market, and many will still be exempt.
Exemptions
There are exemptions to the foreign buyer ban. Exceptions exist for international students, and temporary residents; specifically exempted foreign nationals and refugee claimants, subject to varying conditions, such as tax filing and residency obligations.
Also, properties located outside of a Census Metropolitan Area (CMA) or Census Agglomeration (CA) are excluded from this prohibition.
What does this mean for the Sea to Sky area?
For Whistler & Pemberton, the ban has little impact. As both towns are neither CMA nor CA properties in these municipalities fall into the exemption. So foreign buyers can still buy in Whistler & Pemberton.
Squamish is classified as a CA and is therefore included in the ban. There may be exemptions available to you if you are a foreign purchaser, speak to an account to find out more.
In terms of market impact, like the rest of Canada’s housing experts, we expect the ban will have little impact on the housing market in the Sea to Sky.
Approximately 80% of buyers in the region come from the Lower Mainland. Foreign investors account for a very small market share and the exemptions in place will help foreign investors continue to find loopholes.
New Zealand: A Case Study
New Zealand, a peer country of Canada, implemented a similar policy in 2018. Prior to the ban, 2.9 percent of homebuyers were non-residents. Their number has since dropped to 0.4 percent — and yet their home prices continued to soar.
Similar to Canada, the housing market in New Zealand only cooled when interest rates were increased.
If we can learn from them, we can rest assured that this ban is more politically performative than effective policy. \
What do you think of the new foreign buyer’s ban?
