The budget proposes to extend the ban on foreign purchases of existing residential properties for two additional years, pushing the expiration date from January 1, 2027, to January 1, 2029. However, the central amendment is the exemption of new residential properties from the prohibition. “This would help protect housing affordability by keeping the vast majority of the market available for Canadians, while unlocking additional investment in new housing supply,” the budget document states. The government intends to propose legislation and launch a regulatory process for this change “in short order,” though detailed eligibility rules and an effective date for the new-home exemption have not yet been outlined.
The policy represents a significant evolution from the original intent of the ban, which was introduced by the Trudeau-led government in Budget 2022 to curb foreign demand during a period of record-high home price increases and surges in population growth due to heightened immigration targets. Initially set to expire in 2025, the ban was extended to 2027 in early 2024. Now, with Prime Minister Mark Carney’s administration taking the lead, the strategy shifts from a blanket restriction to a targeted approach. By exempting new builds, the government aims to encourage investment in housing supply without allowing non-Canadians to compete for the existing resale market, which remains the primary focus of affordability concerns for many households.
The decision to maintain the core ban while amending its scope reflects a balance between public sentiment and economic necessity. Public support for the original measure remains high. A national survey conducted by Vancouver-based polling firm Research Co. in April 2025 found that 76 percent of Canadians supported the federal government’s policy, with only 13 percent opposing it. This support crossed partisan lines, with 82 percent of Conservative voters, 78 percent of Liberal voters, and 78 percent of NDP voters from the 2021 federal election backing the ban. However, the economic reality of the construction sector has prompted calls for amendment. Many in the real estate industry have cited similar policies in other countries that are less restrictive, arguing that the current ban is detrimental to Canada’s broader efforts to attract foreign investment.
National Bank of Canada chief economist Stéphane Marion has been a vocal critic of the blanket approach, arguing that the ban undermines Canada’s appeal as an investment destination. “How can you pretend to be a standout investor again if you tell foreign buyers you can’t touch the residential market in Canada?” Marion asked. While the government’s new proposal does not fully reverse the ban, it attempts to address this critique by allowing foreign buyers to participate in the new home segment, where investor presales have historically been crucial for project viability. The budget notes that the government will continue to support a range of policy measures, including those levied by other levels of government, to address housing market pressures and speculation.
The housing proposal is part of a broader fiscal package that includes an additional $44.7 billion in investment over the next 11 years. Finance Minister François-Philippe Champagne stated that this investment is claimed to end homelessness within a decade and build a more affordable housing market. Alongside the foreign buyer amendment, the budget includes a pledge to introduce more affordable mortgages and establish new regulations to enhance publicly available information on insured mortgage rates. These measures are designed to help Canadians compare and shop for the best available rates, aiming to reduce borrowing costs for domestic buyers in a market where affordability remains a critical issue.
Uncertainties remain regarding the implementation of the new-home exemption. The budget does not specify exactly what constitutes a “new residential property,” though industry speculation suggests it may allude to pre-construction properties. The lack of detailed eligibility rules means that developers and foreign investors will have to wait for the legislative process to clarify how the exemption will function in practice. Additionally, while the ban is being extended, the broader economic environment, including interest rates and population growth dynamics, will continue to influence housing demand and supply.
For the average Canadian household, the primary impact of the policy remains the preservation of access to the existing housing market. By keeping the ban on resale properties in place until 2029, the government aims to ensure that the vast majority of the market remains available to Canadian citizens and permanent residents. Exemptions under the existing rules already allow some temporary residents and other eligible buyers to purchase homes, and these provisions are expected to remain. The new exemption for new homes may introduce a two-tiered market: one where foreign capital can flow into new construction, potentially increasing supply and stabilizing presale prices, and another where the resale market remains insulated from foreign competition.
The next steps for the policy are procedural but critical. The government has committed to proposing legislation and launching a regulatory process in “short order.” This will be the moment when the specifics of the new-home exemption are defined, including which types of properties qualify and how foreign buyer status will be verified for new builds. For developers, this regulatory clarity is essential to revive confidence in the preconstruction sector. For consumers, the focus will remain on whether the increased supply of new homes, coupled with the proposed mortgage reforms, will translate into tangible improvements in affordability. As the legislative process begins, the housing market will watch closely to see if this hybrid approach can successfully balance the competing demands of affordability, supply, and investment.
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