Foreign Buyers Are Back on the Table: What History Tells Us

Foreign buyers are not a side note in Canada's housing market. Every time the topic comes up, the market moves. Politicians keep telling us that letting foreign buyers in has little effect on prices. What we actually see on the ground says something different.

I'm Moe Asgarian, Principal Real Estate Broker in Toronto, ranked #47 worldwide at RE/MAX and in the top 1% in Canada. Let's walk through the foreign-buyer story, what the Australia model really is, and what Vancouver and Ontario already taught us.

The Australia model, explained

You have probably seen the headlines. The federal government is once again thinking about backing away from its ban on home purchases by foreigners. They have said openly that they are studying a move toward something like the Australia model. So what does that model say? It lets foreign buyers in, but only for pre-construction and pre-sale projects. They cannot buy a finished, resale home.

The goal is clear. Ottawa wants to breathe life into the pre-sale market, which is in rough shape right now and has essentially frozen. It also wins over a lot of builders, the same builders who have spent years lobbying in Ottawa for exactly this.

What Vancouver's 2016 tax actually did

To understand why this is such a sensitive subject, we have to go back a bit, roughly to 2015. Back then the data showed foreign buyers making up around 10% of pre-sale demand in Toronto. In Vancouver the picture was far more serious, with that number reaching about 33%. The resale market looked similar, and the foreign-buyer share there was nothing to shrug off.

Based on that data, Vancouver acted in 2016 and brought in a foreign-buyer tax. The result? Prices fell by roughly 10% to 20%. This was exactly the moment when politicians kept insisting that foreign buyers were not a major driver of high home prices.

When the money moved to Ontario

Here is the interesting part. The money that left the Vancouver market in 2016 flowed into Ontario that same year and into 2017. And that is exactly when we saw one of the sharpest price jumps in Ontario's history, especially across the GTA. Anyone who was active in the market in those years remembers precisely what happened and the shock it sent through Ontario real estate.

In the end, Ontario had to follow Vancouver's path. The foreign-buyer tax, the non-resident speculation tax, went into effect. In some areas prices dropped as much as 30%, and in a few places close to 40%. So when you look at the data, this policy clearly had an effect.

A province-wide tax and a federal ban

In 2018 and 2019, Ontario applied the tax across the entire province. Why? Because capital was simply relocating. Money moved out of a city with restrictions and into the city next door. Once the rule went province-wide, the price pressure across different regions eased even more. At the time, Doug Ford noted the foreign-buyer share sat somewhere around 5% to under 10%. Yet politicians like Chrystia Freeland kept saying these buyers were not a measurable factor in the housing crisis, even though foreign buyers were being tracked, taxed, and run through a defined system.

Then came 2023. The federal government announced a full ban and formally said residential property purchases by foreigners were prohibited. Of course, they attached plenty of exemptions at the same time, so in practice there was never a true 100% ban.

What a policy reversal could mean now

That brings us to 2025. Vancouver's builders are lobbying Ottawa again and pushing the Australia model forward, the one that lets a foreign buyer into the market but only for new-build and pre-sale projects. The pattern is hard to miss. Almost every time the policy on foreign buyers has changed, the market has reacted.

So the real question for you is what a reversal would do to prices for homes in Toronto and the GTA. History says the reaction is real, and it can be sharp in both directions. That is why this is worth watching closely if you are planning to buy, sell, or invest.

If you want to think through how a shift in foreign-buyer rules could affect your own plans, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.