The chief economist of the National Bank of Canada, Stéfane Marion, has urged the federal government to reconsider the restrictions on foreign purchases of residential real estate. In his view, allowing foreign nationals to buy new condos could bring investment back into housing construction. The appeal comes as 28% of newly built condominiums remain unsold — which, according to the economist, is the highest level since the early 1990s.
In brief
- The ban on home purchases by non-resident foreigners is set to expire on January 1, 2027, unless the government extends it or changes the rules.
- Stéfane Marion proposes allowing foreign buyers to purchase new condos.
- Real estate market representatives believe the restrictions have weakened investment in housing construction at the pre-sale stage.
- Slower immigration and reduced population growth are affecting housing demand in the largest provinces, including Quebec.
- Marion expects Canada’s real estate market to begin stabilizing in 2027 after price declines in 2026.
What happened?
The chief economist of the National Bank of Canada, Stéfane Marion, has spoken in favour of reviewing the federal ban on the purchase of residential real estate by foreign nationals who are not residents of the country.
As reported by Canadian Mortgage Professional, he expressed his position at the Mortgage Professionals Canada conference in Calgary. In the economist’s view, the government should allow foreigners to buy homes in new builds, even if restrictions on purchasing other residential property remain in place.
Marion links this initiative to the need to make Canada attractive again to international investors. He pointed out that 28% of newly built condominiums remain unsold. By his estimate, such a high share of unsold new-build housing has not been seen since the early 1990s.
The economist believes that allowing foreigners to buy new condos could support demand and create additional incentives for construction.
Why does this matter for the real estate market?
The federal ban on home purchases by foreigners was introduced in 2023 as part of measures to improve housing affordability for Canadians. It was later extended until January 1, 2027.
Supporters of the restrictions link them to the need to curb speculative demand and protect opportunities for Canadian buyers. However, representatives of the construction industry point to the other side of the issue: the restrictions may have reduced the number of investors willing to put money into projects before construction is complete.
The president of RE/MAX Canada, Don Kottick, has also spoken in favour of reviewing the ban. According to him, the restrictions on foreign buyers have hurt the pre-sale market, depriving construction projects of part of their potential financing.
Pre-sales are particularly important for a developer. They help gauge demand, secure financing and determine how justified it is to start building a new complex.
If there are not enough buyers, developers may postpone the launch of projects or scale them back. As a result, today’s drop in sales could affect the housing supply in the years ahead.
However, the return of foreign investors does not in itself guarantee lower prices. The outcome will depend on the volume of new investment, the pace of construction, the cost of financing and how affordable the new housing turns out to be for local buyers.
What might Ottawa decide?
The key question is which rules will apply after January 1, 2027.
The options could include extending the existing ban, modifying it, or introducing exceptions for certain categories of property. Marion considers allowing foreigners to buy new condos to be a possible way to support investment without opening the entire housing market to non-residents.
For the government, this is a difficult choice. On the one hand, the construction industry needs buyers and financing. On the other, increased demand from foreign investors must not undo efforts to improve housing affordability for residents of Canada.
Therefore, what will matter is not only the timing of the rule changes but also the specific conditions: which properties will fall under the exception, who will be able to buy them and which restrictions will remain.
At the time of publication, the government’s final decision had not yet been announced.
How is slower immigration affecting the market?
Marion also drew attention to demographic changes. According to his estimates, Canada has moved from an inflow of roughly 1.2 million new residents per year at the peak of the recent growth to significantly lower figures — about 200,000 people.
The economist believes that the sharp slowdown in population inflow has affected housing demand, especially in Ontario, British Columbia and Quebec.
For the real estate market, what matters is not only the total size of the population but also the speed at which it changes. New residents need apartments and houses, which means migration flows affect rentals, sales and developers’ plans.
At the same time, a decline in demand does not automatically solve the housing affordability problem. If construction becomes less profitable, the number of new projects may decrease, which will limit supply in the future.
Marion stresses that Canada needs to find a balance between the pace of population growth, infrastructure capacity and the needs of the economy. He also draws attention to the country’s long-term demographic potential, despite the current slowdown.
What does this mean for Quebec and Montreal?
For Quebec, a possible change in the rules matters for several reasons.
First, the new-build market depends on the availability of financing and buyer confidence. If foreign investors are allowed to purchase new condos, this could widen the pool of potential clients for developers.
Second, the impact will depend on the specific market segment. Additional demand for new condominiums will not necessarily help families looking for affordable housing on the resale market or inexpensive rentals.
Third, the consequences may vary depending on the city and neighbourhood. Even if the new rules support sales in certain Montreal projects, this does not mean that housing prices overall will begin to fall or that construction will become more accessible to all categories of buyers.
For the region, it is important that new investment leads to additional housing rather than merely changing the owners of existing properties.
When might the real estate market stabilize?
Marion forecasts that the national composite home price index, which by his estimate fell by 4% in 2026, may stabilize in 2027.
Among the factors that could limit further decline, he names a labour shortage and rising construction costs. These circumstances make it difficult to increase supply quickly even when demand weakens.
At the same time, a stabilization of the index does not necessarily mean a rapid market recovery. Sales may remain subdued, some areas may experience oversupply, and housing affordability may remain a serious problem for households.
Marion’s forecast should be viewed precisely as an economist’s expectation, not as a guaranteed outcome.
Frequently asked questions
When does the ban on home purchases by foreigners end?
The current federal ban is in effect until January 1, 2027. The further decision depends on the Government of Canada.
Is it proposed to abolish the ban completely?
Marion is primarily in favour of allowing foreign buyers to purchase new condos. This does not necessarily mean a complete removal of all restrictions.
Why do developers need foreign buyers?
They can expand demand for new builds and help finance projects at the pre-sale stage. However, the result depends on how actively investors participate in the market.
Will housing become more affordable for Canadians after the rules change?
This is not guaranteed. Additional investment may support construction but at the same time increase demand for certain properties. The outcome will depend on how much new housing appears and at what prices it will be sold.
Does the forecast for 2027 mean that prices will stop falling?
Marion expects the national index to stabilize, but the situation in individual cities and market segments may differ.
Unique commentary
The Canadian real estate market has found itself facing a difficult contradiction. For housing to become more affordable, supply must increase. But building new houses and condominiums requires capital, investor confidence and buyers willing to purchase units before projects are completed.
The ban on foreign purchases was introduced, among other reasons, to protect Canadians’ opportunities in the housing market. Now industry representatives are drawing attention to the possible side effects of these restrictions on construction.
A possible compromise is to allow foreign investors to buy only new housing while keeping restrictions on other market segments. But the effectiveness of such an approach will depend on the specific conditions and on whether additional investment leads to an increase in supply.
For Montreal and Quebec, the main question is not only who will buy condos, but also how much new housing can be built, to whom it will be accessible and whether the market will be able to meet the real needs of residents.
Ottawa’s decision on the rules that will take effect in 2027 will be an important signal for developers and investors. However, changing the ban alone will not replace a long-term policy aimed at increasing housing supply and reducing construction costs.
