OPINION: Ending the foreign buyer ban won’t fix the condo market, but it will help

The views expressed in this column are solely those of the author.

Three years of real-world experience have confirmed what many of us predicted: Canada’s foreign buyer ban has had a negligible impact on home prices, but it did help bring on the deep freeze in the condo market. The net impact has been to make things worse rather than better.

Back in November 2022, I wrote in these pages that Canada’s foreign buyer ban would have close to no effect on home prices. Three years later, with the ban set to expire on Jan. 1, 2027, those early predictions have held up.

Foreign buyers were not the villains that many assumed when the ban was implemented. At their peak, they made up somewhere between three and five per cent of transactions in our biggest cities, according to the Real Estate Institute of Canada, which itself described the ban as largely “symbolic.”

Why we need foreign buyers in 2027

If foreign buyers were never a problem, nor a really significant force in the market, then a skeptic might ask whether it actually matters whether the ban is lifted at the end of this year.

The skeptic is right that foreign buyers were not numerous enough to move prices. That is precisely why banning them did so little good, from the perspective of local buyers struggling to afford a home. But the lack of foreign investment has had an impact on the condo market, where the flow of new supply has dried up.

Foreign investment is critical at the new condo presale stage. A developer cannot start construction until lenders see roughly 70 per cent of units sold. Foreign buyers have always been disproportionately represented among those purchasing off the floor plan and account for about one in 10 presale buyers. Without them, it’s much harder for Canadian developers to launch projects.

This is why more than two dozen developers wrote to the prime minister and the housing minister last year, asking that newly built homes be exempted from the ban. It’s also why Ottawa is looking closely at Australia’s approach, which keeps foreign buyers out of the existing housing market but permits them to buy new-construction homes for just this reason.

That split makes sense to me. It brings in much-needed capital to expand the supply of housing without affecting the biggest part of the market: existing homes.

Right now, the new construction pipeline is frozen. For the first time in three decades, not a single new condo launched in Toronto in the first quarter of 2026, and a record number of finished units sit unsold. In part, the frozen condo market has resulted from locking out the 10 per cent of buyers who invest from overseas.

If we bring foreign buyers back, even if only for new condos, they can help restore our condo market to health. That’s important because we need those new condos, even though today’s market isn’t strong enough to signal to developers to build them. The Canada Mortgage and Housing Corporation says we need 3.5 million new homes by 2030, and Prime Minister Carney wants to roughly double the pace of homebuilding.

Not enough of what we need

Our problem today is not too many buyers but too few. Even though interest rates have come down from their peak, both investor and owner-occupier buyers still sit on their hands.

From my daily discussions with buyers, it’s clear that one major reason for their hesitancy is the bigger picture: the uncertain trade relationship with the United States and what it means for the wobbly economy.

Another reason they delay is that they aren’t sure whether the condo they buy today will be worth more or less in two years. The average Greater Toronto Area condo now sells for about $639,000, down from a peak of close to $800,000 in early 2022, and many buyers are waiting on the sidelines in case prices fall further.

I had just this discussion with a buyer recently, as I write this. He’s getting married next year and was debating whether to buy a new home to share with his fiancée or rent a while longer. The weak condo market made him think long and hard about it, although in the end he did decide to purchase. It’s in thousands of decisions like his, made across the market, that the fear of falling prices can smother buyers.

Why presales matter

The construction of new housing matters to the people who need affordable and suitable homes, and it matters to the economy as a whole.

Construction contributed $56.6 billion to Ontario’s economy in 2024, or 6.4 per cent of provincial GDP, and employs close to 600,000 people. When new towers go up, money starts moving into the pockets of builders and trades, suppliers, appraisers, movers, and even the staff at the cafe on the corner.

But with new home construction frozen, all of that activity stops, too.

My view is that we should welcome capital with open arms. I’ll take an example from a different sector: look at what happened when Canada lowered the tariff on Chinese electric vehicles in the January 2026 trade deal. Chinese carmaker BYD is considering building a factory here and is opening more than 20 dealerships across the country this year. That result is good for Canada.

Our housing policy should also favour investment that makes new housing supply possible, because that will lead to new housing, jobs and economic growth.

If we’re going to put the builders back to work, restart the new condo pipeline, and begin to reduce the shortage of homes, we should lift the foreign buyer ban.

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