‘Us and them’ doesn’t explain housing market

NPRs accounted for approximately three per cent of the mortgages issued in Edmonton in 2016 and 2.7 per cent in Toronto.

Compared to permanent residents (PR), NPRs purchased significantly more expensive housing in 2016. For example, on average NPRs paid $1,088,477 for single detached dwellings compared to $901,938 paid by PRs. In Vancouver, NPRs paid $230,000 more for single-family units than did PRs. In Montreal, NPRs paid 50-per-cent more for singledetached dwellings than PRs.

The role of NPR homebuyers is even more pronounced among those under 25 years old, who are more likely to be students in Canada than temporary workers. NPRs accounted for 10 per cent of all mortgages issued in 2016 to those under 25 in Vancouver and Toronto.

The past year has witnessed a sudden and significant increase in the number of international students applying to Canadian universities and colleges. The University of Alberta, for instance, has experienced an 82-per-cent increase in applications from international graduate students.

Many experts believe this to be a response to the tightening of immigration regulations in the U.S. and a reaction to the rise of ultraright-wing movements in Europe that has made Canada more attractive to international students.

Over the past few years, provincial governments in British Columbia and Ontario moved to combat rapidly escalating housing prices by targeting punitive taxes at foreign homebuyers. A further tightening of mortgage regulations also occurred at the same time, thus slowing house price escalation and reducing the number of transactions.

While foreign homebuyer taxes target non-residents, NPRs are essentially exempted since they can ask for a rebate later after satisfying residency requirements. And while most NPRs rent, a large number do purchase housing. The mortgage data from the Big Five banks reported by the CMHC suggests that NPRs account for a larger share of mortgages than do NROs.

A knee-jerk response to the CMHC report might be to consider eliminating exemptions for NPRs from taxes on foreign home buyers. That would be a mistake.

Anything that dissuades international students from coming to Canada — and staying after they graduate — could have a significant knock-on effect on the economy.

Those students, after all, are helping to staff the science and engineering labs that are driving innovation at Canada’s universities and in the technology sector, and are a big part of the appeal of Canada to tech giants such as Google and potentially Amazon.

Reducing things to “us and them” could be costly indeed.