Canada's Condominium Magazine
Despite recent measures intended to curb foreign demand, prices for luxury condos continue rising as we head into 2018. According to Re/Max Integra vice-president Christopher Alexander,
“Toronto is an emerging city on the world stage,” and that is drawing attention from non-residents.
As downtown condo prices soared, Vancouver residents and first-time homebuyers were pushed into smaller, downtown units and eastern suburbs. However, the detached single-family home market has been much slower with subtle yet persistent decreases in housing prices. Sutton West Coast realtor Steve Saretsky stated that he has noticed a “local binge,” stating that there has been “a huge shift of foreign buying activity away from resale properties into presale condos, many of which are sold in Hong Kong.”
He also noticed that many of the foreign buyers put 20 per cent down with plans to flip the unit before closing the deal or moving in. Because of this growing trend, he does not predict that the detached market will pick back up anytime soon.
Following a luxury condo price increase of 85 per cent in the first quarter of 2017, Ontario announced a 15 per cent foreign buyers’ tax for properties purchased in metropolitan Toronto in order to slow the market.
“Luxury really operated on an island this year,” said Alexander. “Prices didn’t come down, and the number of sales didn’t really drop. The only change that did happen is that properties have remained on the market a bit longer than they used to.”
According to Statistics Canada, non-residents owned 3.4 per cent of Toronto residential properties and 4.8 per cent of Vancouver’s housing stock as of mid-2017. However, non-resident ownership increased drastically after newly-built condos were isolated, jumping to 15.5 per cent of newly-built condos in Vancouver and 11.3 per cent in Toronto.
Andy Yan, director of The City Program at Simon Fraser University in Vancouver stated, “These numbers confirm what a lot of people have been suspecting is happening, particularly in new builds.
The differences were most pronounced in the Greater Vancouver A subdivision, the City of Vancouver, and West Vancouver. Non-resident owned, single detached houses in Greater Vancouver A had an average value of nearly $8 million, whereas those owned by residents were valued at approximately $5.3 million. In the Toronto CMA, properties owned by non-residents were, on average, $103,000 higher than those owned by residents.
In Toronto, differences in location, property age, and property size were all found to be driving forces behind the latest trends in non-resident versus resident ownership, with property size and age having only having a minor effect. In Vancouver, however, property location, size, and age had a substantially larger impact on the variation of property values.