Three years of practical experience have confirmed what many of us predicted: Canada’s ban on foreign homebuyers had virtually no impact on prices, but it did help plunge the condominium market into a deep freeze. Ultimately, this measure made things worse rather than better.
Back in November 2022, I wrote in this publication that Canada’s ban on foreign homebuyers would have almost no effect on prices. Three years later, as the ban’s expiry approaches — it is set to end on January 1, 2027 — those early forecasts have been confirmed.
Foreign buyers were not the villains many believed them to be when the ban was introduced. According to the Canadian Real Estate Association, at their peak they accounted for 3% to 5% of transactions in the country’s largest cities. The association itself called the ban largely “symbolic.”
If foreign buyers were never the problem and never played a truly significant role in the market, a skeptic might ask: does it really matter whether the ban is lifted at the end of this year?
The skeptic is right that there were not enough foreign buyers to noticeably affect prices. That is precisely why the ban delivered so little benefit for local residents who struggle to afford homeownership. However, the absence of foreign investment has affected the condominium market, where the flow of new supply has virtually dried up.
Foreign investment plays a critically important role at the pre-sale stage of new condominiums. A developer cannot begin construction until lenders see that roughly 70% of units have been sold. Among those buying at the project stage, foreigners have always been disproportionately represented: they account for about one in ten buyers during pre-sales. Without them, it is much harder for Canadian developers to launch new projects.
That is why last year more than two dozen developers sent a letter to the Prime Minister and the Minister of Housing asking that newly built housing be exempted from the ban. For the same reason, Ottawa is closely studying Australia’s experience: there, foreigners are prohibited from buying existing homes, but are allowed to purchase new houses and apartments — precisely to stimulate construction.
It seems to me that such a distinction is entirely reasonable. It makes it possible to attract much-needed capital to expand the housing stock without affecting the largest part of the market — existing homes.
Right now, the pipeline of new construction is frozen. For the first time in three decades, not a single new condominium project was launched in Toronto in the first quarter of 2026, and a record number of already completed units remain unsold. In part, the condominium market freeze has been the result of roughly 10% of buyers investing from abroad being shut out.
If we bring foreign buyers back — even if only to the new-condominium market — they can help restore health to this segment. This matters because we need new apartments, even though the market’s current condition does not give developers sufficient incentives to build them. According to the Canada Mortgage and Housing Corporation, the country will need 3.5 million new homes by 2030, and Prime Minister Carney intends to roughly double the pace of homebuilding.
Today our problem is not an excess of buyers, but a shortage of them. Even though interest rates have come down from their peak, both investors and people buying homes to live in are still in no hurry to enter the market.
From my daily conversations with buyers, it is clear that one of the main reasons for their hesitation is tied to the overall economic situation: uncertain trade relations with the United States and how they are affecting an unstable economy.
Another reason for delaying a purchase is that people are not sure whether a condominium bought today will be worth more or less in two years. Right now, the average condo in the Greater Toronto Area sells for about $639,000 — compared with nearly $800,000 at the peak in early 2022. Many buyers are waiting, fearing further price declines.
This is exactly what I recently discussed with one buyer — I am writing these lines, and our conversation is still fresh in my mind. Next year he is getting married and was weighing whether he should buy a new home to live in with his fiancée or keep renting for a while longer. The weakness of the condo market made him weigh the decision for a long time, although in the end he did decide to buy. It is from thousands of similar decisions made across the market that a situation emerges in which fear of further price drops can paralyze buyers.
Building new housing is important for people who need affordable, appropriately sized homes, as well as for the economy as a whole.
In 2024, the construction industry contributed $56.6 billion to Ontario’s economy — 6.4% of the province’s gross domestic product. It employs about 600,000 people. When new high-rise buildings go up, money starts flowing to builders and tradespeople, suppliers, real estate appraisers, moving companies, and even the staff at the café on the corner.
But if new housing construction is frozen, all of that economic activity stops as well.
I believe we should welcome capital with open arms. Let me give an example from another industry. Recall what happened after Canada lowered the tariff on Chinese electric vehicles under a trade agreement concluded in January 2026. Chinese automaker BYD is considering building a plant here and is opening more than 20 dealerships across the country this year. That is a good outcome for Canada.
Our housing policy should also encourage investment that makes new housing construction possible. This will lead to new homes, jobs, and economic growth.
If we want to put builders back to work, restart the launch of new condominium projects, and begin reducing the housing shortage, we should repeal the ban on foreign purchases of real estate.
