“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.”
One leading industry association weighs in on this divisive topic, and suggests policy aimed at curbing its influence could also result in better data