Canada's Foreign Buyer Ban: What the 2029 Extension Means for Condos
What Happens to Condos with the New Foreign Buyer Ban Rules?
Canada's foreign buyer ban has been extended to January 1, 2029, but with a huge change: foreign nationals can now buy new construction properties, including pre-sale condos. For owners of existing (resale) condos, the ban remains in place, meaning your property is off-limits to foreign buyers for another two years. This policy shift, announced in the 2026 federal budget, is designed to funnel foreign investment into creating new housing supply rather than competing for existing homes. While developers are likely celebrating, the direct impact on resale condo prices will probably be negligible. Foreign buyers were always a small slice of the market, and they still face hefty provincial taxes and large down payment requirements. The real market drivers continue to be interest rates and local demand, not this specific policy change.
Key Takeaways
- Ban Extended for Resale: The prohibition on foreign nationals buying existing residential properties now runs until January 1, 2029.
- New Homes Exempt: The biggest change is that foreign buyers are now permitted to purchase new construction homes, including pre-sale condos, as reported by Daily Hive in 2026.
- Goal is Supply: The government's stated aim is to boost the creation of new housing units without adding price pressure to the resale market. This comes as Canadian ownership housing starts have hit a 26-year low in 2026.
- Minimal Price Impact Expected: Due to the small pre-ban market share of foreign buyers and remaining provincial taxes, this change isn't expected to significantly move resale condo prices.
How Did We Get the Foreign Buyer Ban?
The federal ban wasn't the start of the story. It began at the provincial level years ago. In August 2016, British Columbia introduced a 15% tax on foreign buyers in Metro Vancouver, which was later increased to 20% and expanded to other regions in 2018. Ontario followed in April 2017 with its own 15% tax around Toronto, eventually raising it to 25% province-wide in October 2022. On top of the purchase taxes, governments added annual taxes for vacant homes, like BC's Speculation and Vacancy Tax and a federal 1% Underused Housing Tax, with foreign owners paying higher rates. The full federal ban, officially called the Prohibition on the Purchase of Residential Property by Non-Canadians Act, was a 2021 election promise that took effect on January 1, 2023. It was initially set for two years before being extended.
What Are the New Changes to the Ban in 2026?
The federal government has proposed two major changes. First, the ban's end date for existing homes is pushed from January 1, 2027, to January 1, 2029. The second change is the big one: new residential properties are now exempt. This means foreign buyers can once again purchase pre-sale condos and newly built homes directly from developers. According to the 2026 federal budget, the goal is to "unlock additional investment in new housing supply" while keeping the resale market for Canadians. This is a significant pivot from the original blanket ban. It's essentially a policy designed to help developers get stalled projects off the ground, as investor demand for pre-sales has fallen sharply since interest rates started rising.
How Many Foreign Buyers Were There Before the Ban?
Foreign buyers were never the dominant force in Canada's housing market that some headlines suggested. Before the ban, they were a relatively small group concentrated in specific segments. Statistics Canada data showed that non-residents owned just 7.9% of condos in Greater Vancouver and 7.2% in Toronto. Overall, they owned less than 5% of all homes in Vancouver. CMHC estimated the ban would only affect about 2% of home purchases in a typical year. Even in the condo market where they were most active, foreign nationals owned fewer than one in twelve units. The idea that removing them caused the market to cool is hard to prove, especially since the ban coincided with a period of rapid interest rate hikes. Most experts agree that what happens to house prices when the Bank of Canada hikes rates had a far greater impact on the market.
Is Canada the Only Country Doing This?
No, Canada's new approach is lining up almost perfectly with Australia's long-standing policy. For years, Australia has steered foreign investment towards new construction to ensure that foreign capital adds to the housing stock instead of just competing with locals for existing homes. They also have a ban on foreign buyers purchasing existing homes, which currently runs to June 30, 2029. By allowing foreign investment in pre-sales (what they call 'off-the-plan' apartments) and vacant land for development, Australia has created a model that Canada now seems to be following. Watching the Australian market could give us a good preview of the long-term effects here. The logic is the same: use foreign money to build, not to bid up prices on what's already built.
How Does This Affect Resale Condo Owners?
If you own an existing condo, this change means you're still in the same position you were yesterday. Foreign buyers cannot purchase your property until 2029. The bigger question is whether the exemption for new builds will indirectly affect your value. You might now be competing for local buyers against new condo projects down the street that have a slightly larger buyer pool. However, the impact is likely to be very small. The primary buyers for resale condos in cities like Vancouver and Toronto have always been local first-time buyers and people moving within the city. With provincial taxes still in place, a foreign buyer would need to pay an extra $140,000 on a $700,000 new condo in BC or $175,000 in Ontario. That, combined with a typical 35% down payment requirement from lenders, creates a massive financial barrier. For anyone thinking about their next move, it's a good time to be deciding whether to sell your condo or rent it out based on your own financial situation, not speculation about this policy.
Frequently Asked Questions
When does the foreign buyer ban end now?
The ban on purchasing existing residential properties has been extended and is now set to end on January 1, 2029. However, as of the 2026 federal budget proposal, the ban has been lifted for new construction, including pre-sale condos. This means foreign buyers can purchase new builds immediately, while the resale market remains restricted to Canadian citizens and permanent residents.
Can a foreign buyer purchase any property in Canada?
No. Foreign buyers are restricted to purchasing new construction properties only. The purchase of any existing residential home (resale) is still prohibited until 2029. Furthermore, even on new builds, foreign buyers are still subject to significant provincial taxes, such as British Columbia's 20% Foreign Buyer Tax and Ontario's 25% Non-Resident Speculation Tax, which add a substantial cost to any purchase.
Why did the government exempt new construction?
The government exempted new construction to stimulate housing supply. With ownership housing starts hitting a 26-year low in 2026, developers have struggled to secure the pre-sale quotas needed to get financing for new projects. By allowing foreign buyers back into the pre-sale market, the government hopes to provide developers with another source of capital, helping more projects get built and ultimately increasing the number of homes available for everyone.
Will this change cause condo prices to skyrocket?
It's highly unlikely. Foreign buyers represented a small segment of the market before the ban, accounting for less than 8% of condo ownership in major cities. The remaining hurdles, including provincial taxes that can add hundreds of thousands of dollars to a purchase and high down payment requirements from lenders, will continue to limit demand. The market is far more sensitive to interest rates, which the Bank of Canada raised again in October 2026 to 2.50%.
I own a resale condo. Should I be worried?
There's no need to panic. The impact on the value of your resale condo is expected to be minimal at best. The pool of buyers for your property hasn't changed, and it remains primarily local. While new developments may attract some foreign capital, this isn't expected to create a major price gap or pull a significant number of local buyers away from the resale market. Focus on local market conditions and interest rates, as these are the factors that will truly drive your property's value.
Ultimately, this policy change is more of a targeted intervention for the development industry than a major shock to the overall housing market. If you have a pre-sale closing soon or are considering selling your condo, the fundamentals of your decision haven't really changed. It's always about your personal financial situation and goals.
If you want to run the numbers on your own mortgage or see what rates you could qualify for today, check out our rates at rate.getflowmortgage.ca. For specific questions about your situation, you can always email me directly at alex@getflowmortgage.ca or call our office at 604-262-3500.
By Alex McFadyen, Mortgage Broker & CEO, Flow Mortgage Co.
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