By Kanishka Singh

(Reuters) - Canada on Sunday announced a two-year extension to a ban on foreign ownership of Canadian housing, saying the step was aimed at addressing worries about Canadians being priced out of housing markets in cities and towns across the country.

Canada is facing a housing affordability crisis, which has been blamed on an increase in migrants and international students, fueling demand for homes just as rising costs have slowed construction.

"As part of using all possible tools to make housing more affordable for Canadians, the ban on foreign ownership of Canadian housing, which is currently set to expire on January 1, 2025, will be extended to January 1, 2027," Canadian Deputy Prime Minister Chrystia Freeland said in a statement.

The Canadian government has said foreign ownership also has fueled worries about Canadians being priced out of housing markets in cities and towns across the country.

Last month, Canada announced an immediate, two-year cap on international student permits and said it would also stop giving work permits to some students after graduation as it seeks to rein in record numbers of newcomers seen aggravating a housing crisis.

Rapid population growth fueled by immigration has put pressure on services such as healthcare and education, and has helped drive up housing costs. These issues have weighed on Liberal Prime Minister Justin Trudeau's support, with opinion polls showing he would lose an election if one were held now.

(Reporting by Kanishka Singh in Washington; Editing by Will Dunham)