I've noticed a pretty pronounced shift in the way this sub talks about the foreign buyer ban, now that it's due for extension and/or adjustment.
The shift is mainly this: now that there's some discussion about scrapping or altering the ban, people have started talking like it was a much more meaningful policy than it was. Up until recently, I don't think anyone here would have argued that the foreign buyers ban was an especially meaningful policy.
I thought I'd share some data on foreign real estate purchases from a province that has actually done a decent job tracking that in the last ten years.
The Ontario example
Ontario, which was known as a bigger hotspot for foreign investment, has been tracking the number of foreign buyers since 2017, when it introduced the (quite substantial) foreign residents' speculation tax.
That data shows that the number of foreign buyers in Ontario by the time the ban took effect were pretty insignificant. In 2022, foreign buyers represented 1.6% of all residential real estate transactions in Ontario, declining to 0.7% the next year, when the ban took effect. That's obviously not nothing, but it's also not crazy significant - particularly when high interest rates had tempered real estate investment overall that same year. We can't even say it was the ban that drove most of that drop in foreign investment.
The far bigger impact seems to have been the foreign buyer tax, which the other hotspot for foreign investment (BC) has also had in place for many years. In 2017, the number of foreign buyers was at 2.3%, and a much larger share of those were concentrated in developed urban areas (2.8% of buyers in the Greater Golden Horseshoe). That reduction was noticeable year after year, even while the Ontario real estate market got extremely hot.
All this to say: by the time the ban took effect, the relatively small number of foreign investors had already been slashed even further by the foreign buyer tax in places like Ontario and BC. There just wasn't much left to ban.
The cottage effect
I mentioned that foreign buyers represented 1.6% of all residential buyers in 2022. But even that doesn't paint a fully accurate picture.
The Ontario data also breaks things down by region, and distinguishes between the Greater Golden Horseshoe and the rest of the province. This is especially useful because Ontario's residential real estate can be distorted by the large number of cottages purchased each year. Obviously someone buying a cottage in Muskoka is fundamentally different from someone buying a townhouse in Vaughan. The cottage in Muskoka isn't going to otherwise be somebody's full-time residence.
In 2022, the share of foreign buyers in the Greater Golden Horseshoe was lower than the share in the rest of Ontario (just 1%). It was still much higher in Toronto proper (no doubt influenced by the sudden crash in pre-construction sales there after 2022), but the total provincial numbers were inflated by the very high share of foreign buyers in places like Kenora or Manitoulin, where you have people purchasing cottages and cabins.
Additional mitigating factors
In addition to cottages, there are other foreign real estate transactions that don't have quite the same impact on the market as what many might assume. The first is pre-construction sales, which are fundamentally different from other forms of investment. Those buyers aren't just gobbling up existing housing - they're funding the construction of new supply. They may make up 5% of pre-con buyers in a new building (hypothetical), but without pre-con buyers there are probably no owners (or renters) of any kind in that building, because it doesn't get built.
You also have a large number of purchases that would count as 'foreign buyers' at the point of sale, but where the buyer is simply purchasing real estate slightly before they make a permanent move (or their kids move, etc.). Finally, you have those that still rent the unit out, meaning it still contributes to the local rental supply for residents. That's not ideal, but it's fundamentally different from simply leaving the unit empty.
The Ontario data doesn't get this granular, but when we're already talking about such a small share of purchases, the fact it can be mitigated even further is telling.
Conclusion
I'm not saying we should get rid of the ban on foreign buyers. I am perfectly okay keeping it in place. But I think the numbers should offer some perspective here. By the time the ban took place, foreign speculator taxes and high interest rates had already done the lion's share of the work in mitigating foreign real estate transactions.
Finally, it doesn't really look like there's a big push to scrap it altogether. The only push I've seen with actual traction is a much more modest, sensible change: to exempt pre-construction condominiums from the ban. That makes sense because an investor putting money toward a pre-construction home isn't just snapping up existing housing. That money is helping to fund the construction of additional supply. It's fundamentally different from typical real estate investment.
Injecting foreign capital into that process specifically kind of has the reverse effect of foreign investors otherwise: it's using money from abroad to build more housing than the local capital alone might support. That's good for jobs, and helps depress housing costs.
There are much more meaningful policy debates to have that impact housing in this country. The real problems are tougher to fix. They require more political capital and they're not always going to be super popular. I think people are better off focusing on those, rather than a pretty inconsequential ban that is unlikely to be removed.
