What sort of influence do foreigners have on Canadian real estate?

by Justin da Rosa29 Jun 2016
One leading industry association weighs in on this divisive topic, and suggests policy aimed at curbing its influence could also result in better data

“We do not have good data on purchases of Canadian homes by foreign investors. But, in Vancouver, there is a great volume of anecdotal information that is convincing: activity by foreign investors is distorting the housing market,” Mortgage Professionals Canada wrote in its latest report, Looking for a balance in the Canadian housing and mortgage markets, written by Chief Economist Will Dunning. “Observers are now starting to question if a similar effect is developing in Toronto.”

The association argues that due to a lack of sales data for foreign purchases, it’s difficult to know what influence it has on prices.

Despite this lack of data, conclusions can still be drawn about how much foreign sales are distorting volumes in Canada, according to Mortgage Professionals Canada.

“There is sufficient anecdotal evidence: we should accept that foreign buying is very substantial  in  Vancouver  and  that  the  Vancouver  housing  market  is  being  severely  distorted in consequence,” the association said. “In Toronto, we do not have the same amount of anecdotal evidence, but the recent great strength in the market and an acceleration of price growth have led to suggestions that a similar set of effects may now be developing.”

The association admits existing data may not provide the best estimates for foreign buying, but that some policy changes could result in creating stronger data.

“In  other  words,  proceeding  with  reasonable  regulatory  changes  will,  in  addition  to  addressing  policy  needs,  also  result  in  data  that  can  be  used  later  to  review  and  fine-tune the policies,” it said. While  we  have  a discussion  about  objectives,  the  federal  government  could  quickly  compile useful information  on  best practices internationally.

“The best of those practices could  be  introduced  in  Canada,  within  a  reasonably  short  period  of  time.  It should be  expected that those policies will evolve over time, as we collect stronger data.”



Is a Toronto foreign sales tax a good idea?