Canada's housing affordability crisis continues to fuel intense policy discussions, with the foreign homebuyer restriction—formally the Prohibition on the Purchase of Residential Property by Non-Canadians Act—at the forefront. Enacted on January 1, 2023, and extended through January 1, 2027, this measure prohibits non-Canadians from buying residential properties in urban areas to curb speculation and prioritize domestic access. As debates intensify over its effectiveness and longevity, this article examines empirical data on its impacts, public sentiment, economic trade-offs, and proposed alternatives, drawing from government analyses, surveys, and market studies.

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Current Scope and Public Sentiment

The restriction targets "non-Canadians," including foreign individuals and corporations, barring purchases of properties with up to three dwelling units in Census Metropolitan Areas (CMAs) or Census Agglomerations (CAs)—regions with at least 10,000 core residents. Exceptions include temporary residents like students or workers meeting criteria such as 244 days of physical presence annually and refugees. Amendments in March 2023 exempted vacant land for development and buildings with four or more units.

Public support remains high, with a 2025 Research Co. survey showing 76% of Canadians favoring the policy. Another poll indicated 75% support for banning non-Canadians from residential purchases. Proponents argue it addresses affordability by limiting foreign speculation, but critics contend it overlooks structural issues like supply shortages and zoning barriers.

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Empirical Impacts on Ownership and Market Dynamics

Foreign ownership was already low pre-restriction, at 2% to 6% of residential properties nationwide in 2022, per Statistics Canada's CHSP data. In hotspots, it reached 4.2% in Vancouver and 3% in the GTA, far below domestic investors' one-third share in Ontario and BC. Pre-2023 trends showed a peak of 5% of Metro Vancouver purchases in 2016-2017, dropping to 1.6% by 2018 after provincial taxes like BC's 20% levy.

Post-restriction, foreign ownership declined to around 1%, according to CMHC estimates, with no significant price drops in cities like Toronto and Vancouver, which saw modest increases in luxury segments. Foreign buyers focused on condos and high-end properties, holding 15-20% of non-owner-occupied condos in urban cores and nearly 8% of condos in areas like Montreal's Nun's Island, versus under 1% in suburbs. The restriction has sparked debate over supply effects: it initially stalled projects by limiting foreign capital, prompting exemptions, but critics note it hasn't addressed the 700,000-unit shortfall from 2015-2023 population growth versus builds. CMHC projects a need for 5.8 million homes by 2030 for affordability.

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Economic Trade-Offs and Legal Concerns

Foreign buyers contribute through taxes like Ontario's 20% Non-Resident Speculation Tax, generating revenue without heavy public service use. They bolster rental stock, adding over 200,000 condominium units in major cities over 15 years, per RBC Economics. However, concerns about 15-20% of vacant condos held by non-residents have led to vacancy taxes. Legally, the policy faces scrutiny for potential Charter violations under sections 15 (equality) and 7 (security), as in Li v. British Columbia, where courts upheld similar taxes but noted the ban's outright prohibition may differ. It creates a two-tiered market, restricting urban buys while allowing rural ones.

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Proposed Alternatives and Future Directions

Debates center on whether to relax the restriction: developers argue it hinders supply, advocating models like Australia's, where foreigners buy new constructions only to boost inventory. Proposals include channeling foreign capital into long-term rentals or development, potentially addressing the 3.5 million additional units needed by 2030. Critics call it xenophobic scapegoating, diverting from domestic issues, while supporters emphasize 75% public backing. Government monitoring may lead to adjustments, as seen in policy tweaks based on market data.

In summary, the restriction's future hinges on balancing public support with evidence of its limited impact. As debates evolve, targeted reforms could better tackle affordability without blanket exclusions.