Foreign owners buy 25% of luxury properties

One-quarter of real estate advisers at one of Canada’s largest real estate companies say that 25 per cent of luxury properties in major markets are being purchased by foreign buyers.

Between Feb. 26 and March 9, Royal LePage polled 250 of its real estate advisers who specialize in luxury property across the country, asking them to complete a survey of 31 questions about buyer demographics, including foreign buyer activity.

“While the impact of foreign buying on Canada’s overall residential real estate market is small, we see it growing in importance in the luxury market,” said Phil Soper, chief executive of Royal LePage. “Canada’s stable political and financial systems, along with a tradition of cultural tolerance and openness to immigration and diversity, make our country an ideal destination for wealthy international purchasers looking to invest in real property. Recently, a lower Canadian dollar has made this proposition even more attractive.”

The debate over foreign ownership continues to be a thorny issue with even the chief executive of Canada Mortgage and Housing Corp. Evan Siddall saying the country needs more data on its prevalence. In the March budget, Ottawa pledged $500,000 to Statistics Canada to study the issue, but critics have suggested that’s not nearly enough money for a study.

CMHC continues to talk to industry players from banks to realtors to try to get a handle on the issue. One of the worries of a strong presence of foreign ownership is that it is stimulating price growth and a bubble that could pop, based on the policies of a foreign government.

The LePage survey, released Thursday, stuck to luxury homes, which are believed to be a key driver in escalating average prices. Toronto’s real estate board reported this month that April prices for existing homes were up 16.2 per cent from a year ago, while Vancouver prices were up 25.3 per cent during the same period.

According to the survey, 66 per cent of advisers believe foreign investor activity is up in their region, with 24 per cent maintaining that one-quarter of the properties in their region were purchased by foreign buyers.

For the survey, luxury properties are defined as those that cost no less than four times the average home price in the Greater Toronto Area, Greater Vancouver, Greater Montreal Area and Calgary markets.

The demand for property is picking up, as 67 per cent of advisers stated that luxury home sales have increased since January 2015 — a trend that could be tied to overseas money.

“Despite economic volatility, Canada’s luxury real estate market is healthy and active,” Soper said. “In times of uncertainty, we can see potential home sellers sitting on the sidelines, and as a result available inventory is constrained. That is not the case in today’s luxury market.”