RESCON: Restrictions on foreign home buyers no longer make sense
Three years later, the circumstances that justified the policy on banning foreign home buyers have largely disappeared.
Richard Lyall, Published Aug 07, 2026
By any measure, Canada’s housing market in 2026 looks very different from the one that existed when the federal government imposed a ban on foreign homebuyers in 2023.
At the time, policymakers were searching for ways to cool an overheated market. Home prices were surging, affordability was deteriorating, and public frustration was mounting.
At the time, policymakers were searching for ways to cool an overheated market. Home prices were surging, affordability was deteriorating, and public frustration was mounting.
The foreign buyer ban was introduced as a tangible response to concerns that international investors were driving up prices and putting homeownership further out of reach for Canadians.
Times have changed. Three years later, the circumstances that justified the policy have largely disappeared.
The ban is set to expire automatically on Jan. 1, 2027. Ottawa should let it do so – or better yet, remove it immediately for newly constructed housing.
This is not an argument for opening the floodgates to speculative investors or allowing foreign interests to buy up large blocks of existing housing stock. Canadians remain justifiably concerned about maintaining affordability and ensuring housing serves families first.
But a blanket prohibition that may have made sense during a period of extreme market exuberance is increasingly out of step with today’s economic realities.
The challenge facing Canada’s housing sector is no longer excessive demand. It is the burden of government-imposed taxes, fees and levies that drive up costs, leading to insufficient investment.
Across Ontario and other major urban centres, the condo market has stalled. Unsold inventory has accumulated, pre-construction sales have collapsed, and developers are struggling to secure the financing needed to launch new projects. In many cases, lenders require builders to achieve significant pre-sale thresholds before construction financing is approved.
The consequences are very visible. Housing starts have slowed, project launches are being postponed, and development pipelines are shrinking.
This should concern anyone who cares about housing affordability.
The irony is that while governments have spent years focusing on demand-side measures, Canada’s biggest housing problem remains a chronic lack of supply. If fewer projects move forward today, the country will inevitably face another shortage tomorrow.
Recent forecasts by BuildForce Canada underscore the challenge.
Residential construction investment is expected to slow in the short term as demand for new housing remains constrained by lower immigration levels, evolving economic conditions and, in the Greater Toronto Area, a growing inventory of unsold units. While growth is expected to return by 2028, the industry faces difficult years before that recovery materializes.
That means policymakers should be looking for ways to stimulate construction activity now, not maintaining barriers that discourage capital from entering the market.
Foreign investment can be part of that solution.
Critics often point out that foreign buyers represented only a small share of Canadian home purchases before the ban – typically between two and five per cent. Ironically, that statistic is among the strongest arguments for reconsidering the policy. If foreign buyers played only a modest role in driving prices higher, their exclusion is unlikely to have delivered significant affordability benefits.
Yet their participation can play an outsized role in helping projects reach financing thresholds and attracting capital into a sector that desperately needs it.
Developers, builders and industry analysts have repeatedly noted that every sale matters in today’s market. Even a relatively small increase in demand for new condominium units could help move projects from the drawing board to the construction stage.
That matters not only for the housing market but for the economy more broadly. Residential construction employs hundreds of thousands of Canadians and supports a vast network of suppliers, trades, manufacturers and professional services. When homebuilding slows, the impacts ripple far beyond the construction site.
The real question, then, is not whether foreign investment should be permitted. It is how it should be structured.
Several sensible options already exist.
Australia, for example, has adopted a system that generally allows foreign purchasers to buy newly built homes while restricting purchases that compete directly with existing buyers. Similar approaches could be used in Canada.
Policymakers could allow foreign buyers to purchase newly constructed condominiums while maintaining restrictions on resale housing. Foreign investment could be directed toward purpose-built rental projects, potentially with requirements that ownership be maintained over a long period. Exemptions could be created for individuals purchasing homes as their principal residence.
These kinds of targeted measures would support new construction without encouraging speculative activity. They would also align with the broader economic message Canada is trying to send.
Governments routinely travel the world seeking international investment for infrastructure, manufacturing, energy and technology projects. It is difficult to argue that foreign capital is welcome in every sector except housing – particularly when housing is arguably our most pressing economic challenge.
The Senate Committee on Banking, Commerce and the Economy suggested reviewing the ban and examining whether it has had unintended consequences for housing supply and investment.
That recommendation deserves serious consideration.
Canada needs trillions of dollars in investment over the coming decades to build the homes required for a growing population. Domestic capital alone is unlikely to meet that need.
The foreign buyer ban was introduced during an extraordinary period in the housing market. It addressed public concerns and signalled that governments were taking affordability seriously. But good policy must evolve as conditions change.
Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.
www.torontosun.com/life/homes/rescon-restrictions-on-foreign-home-buyers-no-longer-make-sense
