Canada's ban on foreigners buying residential properties took effect on Sunday after the spike in home prices since the pandemic started, CNN Business reported.
The Canadian government passed this law as home prices surged after the start of the pandemic and some politicians also believed that buyers were responsible for snapping up the supply of homes as investments.
According to the law, an exception has been made for the immigrants and permanent residents of Canada who are not citizens, the report said. But the steep rise in home prices in 2020 and 2021 was already reversed in 2022, much before the law took effect, the report said adding that average home prices in Canada peaked just above $800,000 Canadian in February and have fallen steadily since then.
Canadian Bank is responsible for property price hikes as it continued to raise the interest rates resulting in higher mortgage rates in the country, the report said. Canadian Real Estate Association's (CREA) price index is still up 38 per cent from the end of 2019, before the pandemic, but the group said that the inventory of homes for sale has returned to pre-pandemic levels, the report said.
The association voiced concern about the law, even with the exemptions for people who intend to move to Canada.
"As currently proposed, the prohibition on the purchase of residential property by non-Canadians can impact our reputation as a welcoming nation," the group said in a statement.
“The potential benefits of the ban are likely to be modest,” it added.
"These provide Canadians with a place to spend the winter months and are a form of savings for Canadian retirees. If Canada places a ban on Americans owning property in Canada, we should expect them to respond in kind," the group said according to CNN Business.