After years of debate over whether foreign ownership is indeed driving up home prices in Canada, new data from Statistics Canada released Wednesday finally sheds some light on the issue.
As it turns out, the percentage of homes owned by non-residents in Toronto and Vancouver is actually much lower than previously thought — just 3.4 percent in Toronto and 4.8 percent in Vancouver.
In fact, the value of properties owned by non-residents stood at just 3 percent of all housing stock in Toronto, and 5.1 percent in Vancouver, defying the notion that non-residents are rapidly buying up luxury property in both cities.
The data is a result of a collaborative project between Statistics Canada and the Canada Mortgage and Housing Corporation and comes just eight months after the Ontario government imposed a 15 percent tax on foreign buyers of Toronto property — a move that seems to have rattled the housing market, successfully taming home prices.
The identical policy tool was used in Vancouver back in August 2016, spurred by a backlash against rapidly escalating prices and the influx of foreign buyers into the city — both were assumed to be strongly correlated, despite data at the time that put foreign ownership in the 5-10 percent range.
For non-residents, condominiums seemed to be the property of choice, both in Toronto and Vancouver. The share of the condo market belonging to non-residents stood at 7.2 percent in Toronto and 7.9 percent in Vancouver — for comparison’s sake, non-residents owned 2.1 percent of single-detached homes in Toronto and 3.2 percent in Vancouver.
As VICE Money previously reported, the recent decline in home prices in Toronto has been concentrated primarily in single-detached homes — the condo market has emerged relatively unscathed by the Ontario government’s new housing rules, with current prices averaging above the $500,000 mark. One reason for this trend, perhaps substantiated by Wednesday’s data, is that a higher concentration of foreign ownership lies in the condo market.
Between January and March this year, speculative forces — many of whom were believed to be rich foreign nationals from China looking for a safe haven to dump their cash — took over Toronto’s real estate market, pushing prices up at rates never seen before. In March, the average home in Toronto was selling for $1.2 million.
While this new data does not completely eliminate foreign buyers as a reason why home prices have gone up, it does add a good layer of context to that theory.
Indeed, non-residents seemed to own more expensive condominiums compared to Canadian residents. In Vancouver, foreigners owned condominiums valued at 30.4 percent more than a local; in Toronto, that number was 8.7 percent.
The report also showed that non-residents tended to concentrate their condo purchases in the downtown core of both cities, and chose newer builds over older apartments.