Cheat sheet: Why developers want foreign buyers back

A movement is growing across Canada amongst developers to relax foreign buyer rules.

They say that this will jumpstart housing projects during a historic slowdown, as these buyers are critical for creating cash flow that gets shovels in the ground.

Where it’s hurting: The housing market slump has been shocking. Condo sales across Canada have sharply declined, with Toronto experiencing a 75% drop and Vancouver a 37% decrease between mid-2022 and Q1 2025, according to CMHC. 

Here’s how Urbanation President Shaun Hildebrand summed it up: “The market has entered a phase of the downturn that is really starting to wreak havoc. Project cancellations are mounting, construction starts are collapsing, jobs are being lost, buyers are losing a lot of money, and developers are facing difficulties with closings. 

What developers want: A coalition of developers and industry groups warns that Canada’s federal foreign homebuyer ban and local policies like B.C.’s provincial foreign buyer tax are not helping and noted that foreign investors—who account for about 10% of buyers in the new condo market—are often key to meeting pre-sale thresholds that secure construction financing. 

Behind the ban: The ban was implemented to curb soaring home prices. The federal government argued that foreign money has been coming into Canada for years to buy up residential real estate, increasing housing affordability concerns in cities across the country, and particularly in major urban centres. 

When the ban was extended to 2027, Chrystia Freeland, the Minister of Finance at the time, said this:  “By extending the foreign buyer ban, we will ensure houses are used as homes for Canadian families to live in and do not become a speculative financial asset class. The government is intent on using all possible tools to make housing more affordable for Canadians across the country.”

Academic disagreement: A coalition of Vancouver-based urbanists, planners, architects, developers, and academics argued in their own letter that Canada’s housing crisis is fundamentally about affordability, not just supply. They contend that simply building more homes—particularly high-density market units—has failed to curb prices. They conclude that instead of bailing out speculative developments or reintroducing foreign capital to boost demand, government should use the current market correction to invest in non-market housing; preserve existing rental stock, and tie public subsidies to long-term public benefits. 

Here’s what other data and experts are saying:

• A UBC study found that after B.C. introduced its 15% Foreign Buyers Tax, single-family home prices in neighbourhoods with above-average foreign buyer activity fell about 6% more than in other areas. But multifamily prices were unaffected and researchers concluded that housing affordability is a complex problem with no quick fixes.
• According to the Real Estate Institute of Canada, the issue is nuanced, and foreign capital has had localized effects. In luxury segments of Vancouver and Toronto, foreign buyers likely inflated prices at the margin as they often paid higher than both non-investors and domestic investors.
• The institute added that they believe the real culprits for extreme prices have been low interest rates, domestic speculation, dual-income households, and underbuilding.
• Real estate analysts argue that the ban has not made much difference in terms of house prices or availability, noting that foreign investors often focus on the luxury market. They believe that prolonging the ban will not make housing more accessible.
• According to the 2022 data from Statistics Canada’s Canadian Housing Statistics Program (CHSP), foreign owners held just 2% to 6% of all residential properties across Canada. But developers say they make up roughly 10% of new condo buyers.  

Finding consensus beyond Canada: Developers in Canada have cited Australia as an example of finding a middle ground. Down Under, foreign buyers are temporarily banned from purchasing existing homes but are encouraged to invest in new housing, with the aim of directing capital into supply creation. This is reinforced by supply-side supports like tax incentives for build-to-rent, government-backed pre-sale finance guarantees, and dedicated funding for modular construction.