Homes in Vancouver and Toronto purchased by non-residents tend to be more expensive than those owned by locals, according to a new report from Statistics Canada that comes amid intense debate over the role of foreign buyers in the country’s hottest housing markets.
In long-awaited figures, the agency also said that non-residents owned 7.6 per cent of all homes in the city of Vancouver and 4.8 per cent in the wider region. In Toronto, non-residents owned 4.9 per cent of properties and 3.4 per cent in the larger region, Statscan said, using estimates gleaned from land registries, tax records and other sources.
Real estate industry leaders said the findings support their long-held position that foreign buyers, who are now subject to 15-per-cent taxes in both cities, play a small role in the housing market and that the real challenge is a lack of supply.
“We have a growing demand of housing and broad-based housing shortages, and scapegoat-focused policies don’t solve the big problem, which is we need more places for our growing population to live,” said Phil Soper, chief executive officer of Royal LePage, the largest national real estate company. “The problem lies elsewhere, not with foreign investors.”
However, critics noted that Statscan’s report, which is the first release from a new federal program to address gaps in home ownership data, focuses on non-residents’ ownership of housing stock rather than their share of recent purchases, or flow, which can drive up prices beyond the reach of local buyers.
“What is very interesting is that this data is being spun in a certain manner and it is not illustrating the point that many people want it to make,” said Josh Gordon, a professor at Simon Fraser University in British Columbia who researches the Vancouver and Toronto housing markets. “Once you look at flow, not stock, the picture changes substantially.”
For example, figures in the report’s data tables show that 19.1 per cent of condominium units built in the past two years in the city of Vancouver were purchased by non-residents. In the city of Toronto, non-residents bought 11.6 per cent of recently completed condos.
“That suggests that non-resident buyers are playing a major role in the condo market and much greater than the industry has been letting on,” Prof. Gordon said.
Faced with a public outcry about skyrocketing housing prices and concern about the role of foreign money, the B.C. government levied a 15-per-cent tax on international residential property purchases in the Vancouver area in August, 2016. The Ontario government followed suit for the Toronto region last April. Housing prices fell in both cities, but have since increased.
In its budget earlier this year, the federal government allotted $39.9-million for a five-year Statistics Canada project to develop a new system to track the housing market, including foreign ownership levels. The Canada Mortgage and Housing Corp., which has collected data on non-resident condo ownership since 2014, produced a companion report on condo ownership.
However, in their reports released on Tuesday, Statscan and CMHC did not address some of the most pressing questions surrounding the housing markets in Vancouver and Toronto, including whether international buyers have driven up home prices; as well, they did not measure proxy ownership, which is when properties are registered in local residents’ names but purchased with relatives’ foreign capital.
Non-residents who own properties in Vancouver largely favour luxury homes, Statscan found.
The average assessed value of detached houses owned by non-residents was about $2.3-million in the Vancouver region, compared with $1.6-million for those owned by locals. The average value of non-residents’ condos was 30.4 per cent higher than those owned by residents, $692,000 compared with $531,000.
In the Toronto area, the average assessed value of detached houses owned by non-residents was $944,000, about $100,000 more than residents’ properties. Non-resident owned condos were 8.7 per cent more expensive on average than those owned by locals. (Toronto property assessments generally lag well behind market value, which may explain the smaller spread.)
Statscan also found that non-resident ownership is more prevalent among condominiums, especially in newer urban buildings, with 7.9 per cent of the Vancouver area’s condo apartment stock owned by non-residents compared with 7.2 per cent in the Toronto area. The agency didn’t delve into the reasons behind the preference, but realtors say many foreign clients prefer condos because they offer turnkey conveniences for work or leisure trips and are also easier to rent out.
CMHC said non-resident condo ownership is concentrated in newer buildings in both cities, which tend to cost more than older units. CMHC also found that more condos in Montreal are now owned by non-residents – 1.7 per cent this year compared with 1.1 per cent in 2016 – suggesting that Vancouver and Toronto’s foreign buyers’ taxes have shifted some international demand east.
Statistics Canada’s findings are based on residential property market data as of May for the Toronto area and June for the Vancouver area.
Statscan defined non-resident property owners more broadly than the governments of B.C. and Ontario, considering them as both non-citizens who live abroad as well as Canadians whose principal dwellings are outside the country. By contrast, B.C. and Ontario define foreign buyers as those who are not citizens or permanent residents of Canada.
According to recent B.C. data, foreign buyers purchased 3.1 per cent of homes in Metro Vancouver in October, with Richmond and Burnaby having the highest levels of such international activity, at 6.9 per cent and 6.7 per cent, respectively.
Foreigners bought 5.6 per cent of Toronto homes sold over the three months ending in August, according to the Ontario government’s most recent information. The figure was 3.2 per cent for the wider Greater Golden Horseshoe region.