November 30, 2016 3:59 pm

Foreign ownership of condos dips in 2016: CMHC

Construction workers chat on a condominium building site in Toronto, Ontario, Canada October 3, 2016.

REUTERS/Chris Helgren
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OTTAWA – Foreign ownership in Canada‘s top condo markets dropped in 2016 after the introduction of a foreign buyers tax in Vancouver, and remains a small fraction of overall ownership concentrated mostly in newer buildings, Canada‘s housing agency said on Wednesday.

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The share of foreign ownership fell to 2.2 percent in Vancouver in 2016 from 3.5 percent in 2015, the Canada Mortgage and Housing Corp said in a report that suggested the August introduction of a 15 percent tax on foreign buyers in that city had dampened demand.

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But buyers did not appear to have shifted to other Canadian cities where the tax was not imposed, with foreign ownership falling to 2.3 percent in Toronto from 3.3 percent a year earlier. Foreign ownership in Montreal dipped to 1.1 percent from 1.3 percent in 2015, the report showed.

Foreigners have been blamed for driving up prices in Canada‘s hot housing market, particularly in Vancouver, where locals believe wealthy Chinese buyers have made housing unaffordable for ordinary Canadians.

The west coast province of British Columbia imposed the tax on foreign purchases of homes in Vancouver, Canada‘s most expensive housing market. Such purchases dropped almost immediately, but crept back somewhat in October.

READ MORE: $58M Vancouver penthouse up for sale, Canada’s most expensive listing

While government data has consistently shown foreign investment to be a small factor in the housing market strength, critics say the data is sparse and may not capture purchases made by foreigners using local family members or corporations to mask their origins.

The CMHC report said foreign ownership was highest in buildings completed since 2010, and the role of foreign buyers in new projects needs to be examined further.

READ MORE: Two-thirds of B.C. residents say foreign ownership tax won’t cool real estate market: poll

“Foreign ownership is just one factor influencing Canada‘s housing markets – but it’s an important one that continues to gain attention. Our studies show that the share of foreign ownership remains low and concentrated in newer, larger buildings located in the cores of major cities like Vancouver, Toronto and Montreal,” CMHC analysts Andrew Scott and Francis Cortellino wrote in the report.

The report showed roughly half of the condo units owned by foreigners in Toronto were in newer buildings, suggesting offshore investors have helped drive the condo boom in Canada‘s largest city. Still, foreign ownership even in newer buildings was just 3.9 percent in 2016, the report said.

In Vancouver, foreign ownership in newer buildings was 5 percent, the report showed.

 

© 2016 Thompson Reuters

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