The CEO of a Chinese website that specializes in marketing overseas property said Wednesday that foreign buyers are “not the problem” in Canada’s housing markets.
The comments followed Tuesday’s release of data by Statistics Canada and the Canada Mortgage and Housing Corporation (CMHC), which looked at the share of homes owned by non-residents across the country.
However, in making that assertion, the CEO only cited data showing a low overall share of ownership — she didn’t mention the value of homes owned by non-residents, nor how that share changes by housing type, region or period of construction.
WATCH: Non-residents own less than 5% of Toronto, Vancouver homes
In a statement issued Wednesday, Carrie Law, CEO of Juwai.com, asserted that foreign buyers are “just a straw man for a country that refuses to recognize that cheap credit for local investors is the real reason prices are rising.”
“There has always been one fundamental truth in the housing market: access to cheap loans drives up prices,” she added.
In saying this, Law cited stats such as the one showing that non-residents own 7.2 per cent of condominium apartments in the Toronto area and 7.9 per cent of such units in Metro Vancouver.
She also cited statistics that the CMHC gathered for Montreal, showing that non-resident buyers from China doubled their ownership of condominium apartments from 10 per cent to 21 per cent.
Law also said that “non-resident buyers are first-time buyers’ best friends.
“They like new buildings, and their pre-construction commitments give developers the security they need to build projects that also house many first-time buyers.”
But there’s plenty more data that wasn’t included in Juwai.com’s news release.
The statement made no mention of statistics showing that non-residents own 19 per cent of condominium apartments built in the City of Vancouver between 2016 and 2017, nor that they own 24 per cent of such units in the City of Richmond.
Juwai.com’s statement came out on the same day that BMO senior economist Robert Kavcic said he’s not convinced that foreign ownership in real estate is a small deal.
Kavcic noted that the data gave a “snapshot of the share of the housing stock owned by non-residents at one point in time.”
He went on to say that the data doesn’t tell us “how much current demand is influenced by foreigners.”
“Remember, it’s the marginal buyer that sets the price, not somebody who might have purchased a property years ago,” Kavcic said.
If non-residents can be considered “marginal buyers,” then the properties they own are often worth a lot more than the ones that belong to residents.
The StatsCan data showed that a single-detached home owned by a non-resident in the City of Vancouer was worth $3,638,500 on average, 26 per cent more than a resident’s home, at $2,882,600.
The release also showed that resident-owned condominium apartments in the City of Vancouver are valued at an average of $530,800 for residents, and $692,000 for non-residents — about 30 per cent more.
Non-residents are also drawn to bigger homes — an average of 4,800 sq. ft., more than 32 per cent larger than resident-owned properties.
Many experts said the data was incomplete when it was released on Tuesday. The release did not provide information on presales, which have doubled in downtown Vancouver in the past two years, according to Reuters.
Nationally, resale condo prices have risen by 33 per cent in the same time period, it added.
In an email, Law said she based her insights on a number of sources, including Capital Economics, a firm that has blamed household debt, and not foreign buying, for the run-up in prices seen across Canada.
As for the numbers showing a higher concentration of non-resident owners in newer buildings, Law said this is a “good thing,” because they “drive new construction and add more supply to the market than does local demand.”
“Non-resident buyers are more willing to purchase before construction has completed than are locals,” she said.
“That means their purchases are especially important at helping the developer show her financiers there is enough demand to make her project worthwhile.”
Law went on to say that “every single unit bought by the non-resident could enable the construction of three units for locals that otherwise wouldn’t get built.”
As for BMO’s insight about marginal buyers, she said it’s a “point well taken.”
“Now, let’s take it to its logical conclusion and estimate what ripple effect is caused by the tens of thousands of local investors who have access to historically cheap mortgages?” Law asked.
For Andy Yan, an urban planner and director of SFU’s City Program, it’s “problematic to go directly into causality as Juwai is claiming.
“There’s still a lot more to engage in, the fact that it is a factor, that it isn’t zero,” he said.
“Do we have 20 per cent of condos being bought by non-residents? I think that puts a very unique pressure on the housing stock.”
As for Law’s comments about non-residents being first-time buyers’ “best friends,” Yan said they can also “crowd them out, they can outbid them in a competitive marketplace.
“They can arguably bid higher than them in terms of access to capital, in terms of a combination of principal and capital, specifically access to global wealth.”
With as many as a quarter of recently-built condominium apartments being bought up by non-residents in one municipality, Yan said there’s a question of priorities.
“Do we have a priority on housing non-residents as opposed to residents?” he asked.
As for the share of overall properties owned by non-residents across Metro Vancouver, Yan said it’s a factor when it’s not zero.
“It’s here, and when we drill down into particular types of units, we see the significant presence of non-resident buyers,” he said.