Foreign ownership of Canadian condos down from 2015: CMHC
Report comes amid concerns about foreign ownership pricing Canadians out of the market
Foreign ownership of existing Canadian condominium units in Canada's three biggest cities has declined in 2016 compared with the previous two years, according to a CMHC report that aims to shed light about foreign buyers on Canadian real estate.
Canadian condo ownership by foreign residents is highest in Toronto, where 2.3 per cent of units are owned by foreign residents, according to the Canada Mortgage and Housing Corporation. Vancouver and Montreal have foreign condo ownership rates of 2.2 per cent and 1.1 per cent, respectively.
Levels of foreign condo ownership in all three cities declined from 2015, when foreign residents owned 3.3 per cent of Toronto condos, 3.5 per cent of Vancouver condos, and 1.3 per cent of Montreal condos. Foreign ownership levels in 2014 were very similar to levels in 2015.
CHMC attributed the decline from 2015 levels to "an unusually high proportion of foreign ownership in newly constructed condominiums that year."
- Foreign purchases of Metro Vancouver homes plunge
- Locals outnumber foreigners 10-1 in Toronto's condo market
- Ottawa tightens mortgage rules, targets foreign buyers
Foreign condo ownership skews towards newer, larger buildings in downtown cores, said CMHC. In Toronto, 3.9 per cent of condos built in 2010 or later were owned by foreign residents, who also owned five per cent of new condos in Vancouver.
The study measured foreign condo ownership by surveying property managers in major Canadian cities about condo residents. It defined foreign residents as those "whose primary residence is outside of Canada," rather than by nationality.
"Thus, the results of CMHC's survey of foreign ownership should not be mistaken as a precise measure of strictly non-Canadian ownership in housing because the results include Canadian condominium owners who live abroad," said the report.
Looking for more data on foreign buyers
CMHC's findings support the theory that foreign buyers may not be driving up prices in hot urban Canadian real estate markets, said CIBC economist Benjamin Tal.
"We have to realize that it is a factor, but it's not the main factor," said Tal, who added that Canadian policymakers might want to take a closer look at domestic homebuyers, particularly house flippers seeking quick profit.
Still, Tal said, Canadians would benefit from knowing more about why foreign buyers choose Canada — for example, whether they're buying Canadian homes as an investment, or just as a safe place to park their cash.
In March, CMHC told CBC News that it was using new tools to measure foreign ownership, including closer co-operation with law enforcement agencies and the Canada Revenue Agency. CMHC's chief economist has described researching foreign ownership as a key priority for the organization — just as it is for the federal government and its provincial counterparts.
In early October, the federal government unveiled new rules for non-residents seeking to buy Canadian homes. The new rules prevent non-residents from buying a Canadian home, claiming it as a principal residence, and avoiding capital gains upon selling the home.
Ottawa also decreed that all insured mortgages must undergo "stress tests" to see if the mortgage holder could continue making payments if interest rates increase. Before, that requirement only affected certain borrowers.
Later in October, CHMC warned that "spillover effects from Vancouver and Toronto" pose a threat to the overall housing market in Canada.
Politicians spooked by foreign buyers
The spectre of foreign buyers pushing up home prices in Canadian cities has become a major political issue, especially in Vancouver and Toronto.
In July, Vancouver introduced a 15 per cent property transfer tax on foreign buyers in an attempt to cool the market down. Data released by B.C.'s Finance Ministry suggests the tax is having the desired effect, reducing foreign real estate purchases in Metro Vancouver.
A month ago, Ontario Premier Kathleen Wynne told CBC News that Ontario is "not going to use that mechanism" to curb foreign buying the Greater Toronto Area. The provincial government later doubled the tax rebate offered to first-time homebuyers, while simultaneously increasing the land-transfer tax on homes sold for more than $2 million.