Canada’s foreign buyer ban is approaching an important turning point.
The federal government introduced the Prohibition on the Purchase of Residential Property by Non-Canadians Act in 2022, with the restrictions taking effect in January 2023. At the time, Canada’s housing market had recently experienced extraordinary price growth, and affordability had become a major political and economic concern.
The policy was designed to restrict certain non-Canadians from purchasing residential properties, with the broader objective of ensuring that Canadian housing would primarily serve people living in Canada rather than international investment demand.
The ban was subsequently extended and is currently scheduled to remain in effect until January 1, 2027.
As that deadline gets closer, an important question is emerging:
What should Canada do with the foreign buyer ban next?
Should the government extend it again, allow it to expire, or replace it with a more targeted system?
Did the Foreign Buyer Ban Actually Work?
The effectiveness of the policy remains a subject of debate.
Supporters argue that housing should first and foremost serve the needs of Canadian residents. Even if foreign ownership represents a relatively small percentage of the overall housing market, international demand can be more concentrated in certain cities and property types.
Statistics Canada data shows that in 2023, non-residents owned approximately 2.1% of residential properties in Ontario and 3.1% in British Columbia. In the Toronto census metropolitan area, the figure was approximately 2.7%.
At first glance, these percentages may appear relatively small.
However, real estate markets are highly localized. Foreign ownership and investment activity may be concentrated in specific segments, particularly condominiums and higher-priced properties in major international cities such as Toronto and Vancouver.
This is why supporters of the ban argue that even a relatively small group of buyers can still influence certain segments of a supply-constrained market.
But Today’s Housing Market Is Very Different
One of the strongest arguments for reconsidering the policy is that the Canadian housing market of 2026 looks very different from the market in which the ban was originally introduced.
The policy was created following a period of exceptionally strong demand and rapidly rising prices.
Since then, higher borrowing costs and affordability pressures have changed buyer behaviour significantly. Transaction volumes have weakened from previous highs, while certain segments—particularly Toronto’s condominium and pre-construction markets—have faced considerable challenges.
That has changed the conversation around foreign investment.
Some developers and real estate industry professionals argue that international buyers historically provided an important source of demand for pre-construction projects.
This matters because developers generally need to achieve certain pre-sale targets before lenders are willing to provide construction financing.
If fewer buyers are willing or able to purchase pre-construction units, some projects may struggle to reach those thresholds. Projects can then be delayed, redesigned or cancelled altogether.
From this perspective, restricting demand may have consequences for future housing supply as well.
Why Some Want the Ban to Stay
There is still significant support for keeping restrictions in place.
The fundamental argument is straightforward: Canada continues to face a serious affordability problem, and opening the residential market to additional international demand could create more competition for a limited supply of housing.
For first-time buyers already struggling with mortgage qualification, down payments and high housing costs, additional demand may not be welcome.
There is also a broader policy question.
Should Canadian residential real estate be treated primarily as housing, or should it also function as an international investment asset?
That debate existed long before the foreign buyer ban and will likely continue regardless of what happens in 2027.
Is There a Middle Ground?
The eventual decision may not necessarily come down to simply keeping or eliminating the ban.
Canada could instead move toward a more targeted framework.
Other countries provide potential examples.
Australia has used restrictions that differentiate between existing housing, new construction and vacant land, while Singapore has relied heavily on additional taxes and duties to increase the cost of residential purchases by foreign buyers.
A similar approach in Canada could potentially distinguish between different types of foreign investment.
For example, policymakers could consider whether international investment in new construction should be treated differently from foreign competition for existing resale homes.
The government could also use additional taxes or ownership rules rather than a broad prohibition.
Such a framework could potentially preserve access to international capital while discouraging speculative demand in housing segments where affordability is already under significant pressure.
What Could a Policy Change Mean for Toronto?
Even if the federal government eventually relaxes the restrictions, it would be unrealistic to expect Toronto home prices to suddenly rise because foreign buyers return.
Housing prices are influenced by a much broader set of forces, including:
- Interest rates and mortgage costs
- Household income and purchasing power
- Population and employment growth
- Housing inventory
- New construction
- Consumer confidence
- Overall economic conditions
Foreign buyers represent only one component of demand.
However, some segments of the market could be more sensitive to a policy change than others.
Toronto’s downtown condominium market, luxury properties and pre-construction developments would likely be among the areas worth watching most closely, particularly because these categories have historically attracted more international interest.
Any impact would also take time. Policy changes do not instantly translate into transactions, and transactions do not instantly reshape prices.
The Bigger Issue Is Still Housing Supply
The debate over foreign buyers can easily become the headline, but it does not resolve Canada’s underlying housing challenge.
Restricting one source of demand may reduce competition at the margin, but it does not automatically create more homes.
Likewise, bringing international buyers back into the market may support certain developers and projects, but it does not automatically make housing more affordable.
The longer-term questions are much larger:
Can Canada build enough housing to keep pace with demand?
Are we building the types of homes that families actually need?
Can infrastructure and development approvals keep pace with population growth?
And perhaps most importantly, can household incomes and purchasing power keep up with housing costs?
These issues will ultimately have a much greater influence on the direction of Canadian real estate than any single foreign buyer policy.
What Should Buyers, Sellers and Investors Watch?
As the current deadline approaches, the most important development will be whether the federal government chooses to extend, modify or replace the existing restrictions.
For buyers and sellers, there is little reason to make a major real estate decision based solely on speculation about what may happen to the foreign buyer ban.
For investors and developers, however, any change could be more significant—particularly in markets and property types that traditionally attracted international capital.
The foreign buyer ban is therefore worth watching, but it should be viewed as one part of a much larger housing picture.
Ultimately, the direction of Canada’s housing market will continue to depend on the balance between supply, demand and affordability.
The Fisher Group will continue to monitor these policy changes and what they could mean for the Greater Toronto Area real estate market.
