New research on the Canadian housing market shows foreign buyers account for a small portion of house and condominium owners in the country’s largest cities.
Non-residents owned 3.4 per cent of all residential properties in Toronto, according to new housing statistics by Canada Mortgage and Housing Corp. and Statistics Canada. In Vancouver, non-residents owned 4.8 per cent of residential properties.
CMHC also says that foreign buyers owned less than one per cent of the condo stock in 17 metropolitan areas across the country.
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The figures mark the first time that CMHC and Statistics Canada have quantified the level of foreign ownership in the country’s hot housing market to see how much influence foreign buyers have over skyrocketing prices.
And the numbers suggest a limited role of non-resident homeowners.
“These numbers are still significant, but of course they alone don’t explain the rapid appreciation in house prices in the [Greater Toronto Area],” said John Pasalis, president of Toronto-based Realosophy, a real estate information and services company.
“Domestic speculation was probably a bigger factor than non-resident purchases,” he adds.
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The impact of foreign homeowners is likely more pronounced in the condo market, where non-residents hold 7.9 per cent of residential properties in Vancouver and 7.2 per cent in Toronto, StatCan found.
And in both the condo and the single-detached homes segments, property owned by non-residents is more expensive, on average, than that owned by Canadian residents.
In the city of Vancouver, the average value of condo apartments owned by foreign residents was $930,600, or 25.6 per cent higher than the average resident-owned unit. In Toronto proper, the average foreign-owned condo is valued at $439,000, 7.6 per cent more than the average condo owned by residents.
The same trend was evident for single homes. In Vancouver, the average detached house owned by foreign homebuyers is worth $2.3 million compared with $1.6 million for resident-owned homes. In Toronto, the difference was $103,500, with homes owned by non-residents roughly 12 per cent more expensive than those owned by residents on average.
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Still, the relatively small share of foreign-owned homes raises questions about the effectiveness of recently adopted measures aimed at dampening foreign investment in real estate.
Both B.C. and Ontario have enacted a foreign homebuyers tax in an attempt to slow breakneck price growth in their hottest real estate markets.
“Every attempt at estimating the role of foreign buyers reaches the same conclusion: They play an overstated role compared to the facts, while policy measures that target foreign buyers are more about the politics than the economics,” Derek Holt, head of Capital Markets Economics at ScotiaBank, told Global News.
B.C.’s first-ever data on foreign homebuyers in Vancouver showed that non-residents accounted for five per cent of purchases in June of 2016, before the implementation of the tax.
A similar survey in Ontaio shower non-resident homebuyers accounting for around seven per cent of monthly purchases in Toronto, prior to the tax.
And while both provinces saw a dip in foreign buying activity following the surtax, neither has seen a meaningful and lasting impact on home prices from it so far.
“At some point we need to face the reality that the deterioration of housing affordability has been driven by domestic buyers and domestic policy choices governing housing supply,” said Holt.
– With files from the Canadian Press
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