Canada's Condominium Magazine
Contrary to popular belief (and previous trends), it appears that foreign buyers now account for less than five per cent of purchases in the Toronto housing market. However, the properties that they buy tend to be newer and more expensive than that of the average Canadian homeowner. The average home price for properties purchased by non-residents was $2.3 million, compared to an average of $1.6 million for Canadian homeowners. Furthermore, trends have shown a migration of foreign buyers out of Toronto and Vancouver, and into previously untapped markets.
Statistics provided by Canada Mortgage and Housing Corp. and Statistics Canada show that residential properties owned by non-residents accounted for 3.4 per cent of Toronto sales and 4.8 per cent of Vancouver sales.
The Canadian Mortgage and Housing Corp. stated that foreign buyers also owned less than one per cent of the condo stock in 17 metropolitan areas across the country. According to the CMHC survey, downtown Montreal and Nun’s Island saw the greatest increase in the share of non-resident owners over the course of the year. On Nun’s Island, the rate nearly doubled from 4.3 per cent to 7.6 per cent.
“The lack of growth in Toronto and Vancouver, combined with the increases in Montreal, indicate the possibility of a shift from these centres after the introduction of foreign buyers’ taxes in Ontario and British Columbia,” said CMHC chief economist Bob Dugan in a release. “Other factors attracting demand to Montreal include lower housing prices and a relatively strong economy.”
CMHC head Evan Siddall had previously stated that foreign ownership accounted for less than five per cent of the housing market. “Foreign ownership is a thing; it’s not the thing,” he said in an interview.
John Pasalis, President of Toronto real estate information and services company Realosophy, the numbers “are still significant, but of course they alone don’t explain the rapid appreciation in house prices… Domestic speculation was probably a bigger factor than non-resident purchases.”
As British Columbia and Ontario enacted foreign buyer taxes and other measures aimed at curbing foreign real estate investments, questions rose regarding the effectiveness of such regulations. “Every attempt at estimating the role of foreign buyers reaches the same conclusion,” said Derek Holt, head of Capital Markets Economics at ScotiaBank. “They play an overstated role compared to the facts, while policy measures that target foreign buyers are more about the politics than the economics.”
Although the foreign buyer tax was followed by a decline in foreign purchases, Holt maintained that the numbers are far too small to make any significant impact. “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.”