When Canada banned foreign homebuyers in 2023, the message was clear: Canadian homes for Canadian residents. No more offshore speculation driving up prices in Vancouver and Toronto. No more empty condos used as safety deposit boxes in the sky.
But here's the thing about blanket bans: they're blunt instruments. And two years in, the collateral damage is becoming hard to ignore.
The Capital Problem Nobody Wanted to Talk About
Toronto is on pace for its lowest housing starts in 30 years. Condo presales have collapsed as mom-and-pop investors exit the market. Developers can't get projects off the ground without buyers lined up first, and those buyers have vanished.
The foreign buyer ban wasn't the only cause, but it didn't help. By cutting off one channel of capital, we inadvertently tightened the screws on an already strained construction pipeline.
Now, Housing Minister Gregor Robertson is floating a trial balloon: what if we opened the door back up, but only for new construction?
The Australia Experiment
Australia has been running this playbook for years. Foreign buyers can purchase newly built homes and vacant land for development, but established properties remain off-limits. The goal is straightforward: foreign money adds to the housing stock rather than competing for existing supply.
The results are mixed but instructive. Australia has seen strong housing starts in the rental apartment sector, despite struggling to meet its overall homebuilding goals. Foreign capital helped fund projects that might not have been pencil-ed out otherwise.
Canada's government is taking notes. Robertson has said officials will carefully review Australia's experience before making any decisions for 2027.
What This Means for Real Estate Professionals
If Canada follows Australia's lead, the pre-construction market could see renewed interest from offshore buyers. That's good news for developers struggling to hit presale thresholds. It's also good news for agents who specialize in new builds.
But the resale market would stay protected. Foreign buyers wouldn't be competing with first-time buyers for existing homes. That's the political line the government can't afford to cross.
For brokers, the takeaway is this: capital flows are about to get more complex again—understanding who can buy what, and under what conditions, becomes a competitive advantage.
The Politics Are Tricky
Ana Bailão, CEO of Build Canada Homes, has been vocal about the need for tax reforms to attract foreign institutional investors. She's not alone. Developers have been lobbying for broader access to offshore capital for years.
But there's legitimate concern about what happens if regulations aren't tight enough. The pandemic-era price surge is still fresh in everyone's memory. Nobody wants a repeat of 2021's bidding wars.
The government's challenge is designing a system that captures the benefits of foreign investment, including more construction, jobs, and housing stock, without the drawbacks of speculative froth.
The Bottom Line
Canada's foreign buyer ban was always intended as a temporary measure, albeit one presented as a permanent policy. The 2027 review provides Ottawa with a face-saving way to adjust course without admitting that the original policy was too broad.
For real estate professionals, the opportunity is in preparation. The clients who trust you through uncertainty will be the ones who stick around when the market shifts. Whether foreign capital returns or not, that relationship remains your most valuable asset.
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