Foreign ownership of condos dips: CMHC

TORONTO • Canada Mortgage and Housing Corp. says foreign-ownership levels remain low in the highrise sector and are even starting to fall.

In a report Wednesday, the Crown corporation said foreign ownership of condos was highest in Vancouver and Toronto at 2.2 per cent and 2.3 per cent, respectively. Both cities saw a decline in foreign-ownership levels over the past year in that segment of the market. The Toronto figure was down from 3.3 per cent a year ago, while Vancouver was off from 3.5 per cent during the same period.

“Foreign ownership is just one factor influencing Canada’s housing markets — but it’s an important one that continues to gain attention. Our studies show that the share of foreign ownership remains low and concentrated in newer, larger buildings located in the cores of major cities like Vancouver, Toronto and Montreal,” Bob Dugan, chief economist with CMHC, said in a statement. “We continue to work with our partners in finding new ways to bring this important story into sharper focus.”

The share of foreign ownership was 3.9 per cent in Toronto for buildings completed since 2010, but in buildings with more than 500 units, it rose to 5.5 per cent. New buildings in Vancouver had a five-per-cent share of foreign owners, while buildings with more than 100 units reported a 3.2-per-cent share of foreign owners.

In its report, CMHC noted the 15-per-cent additional property transfer tax on foreigners buying in Vancouver brought in Aug. 2. The B.C. government had said, leading up to the introduction of the tax, up to 13 per cent of purchases were made by foreigners — paying more than 30-per-cent above the average paid by Canadians.

“In the two months following the introduction of the tax, the proportion of foreign buyers fell to about one per cent in almost all sectors of the Vancouver area and the average price of foreign-purchased homes was below that of homes bought by domestic residents,” said CMHC. “This decrease in the number of foreign purchases was due not only to the impact of the tax on sales but also to the fact that a number of foreign investors probably moved up their purchases by a few days before the new measure became effective.”

Adil Dinani, an adviser with Royal LePage, said his perception of the market is that there is more foreign investment than CMHC has identified. He suggested that may be driven by a division between what is actually foreign-owned and what is financed from abroad.

“It does come as a bit of surprise,” said Dinani, about the numbers which he thinks have been driven by a falling loonie. “I know from my personal clients, I have seen an uptick. Since August we did see a pullback from the tax but prior to that we didn’t see what they saw in the data.”