(Adds quotes from mortgage insurance agency CEO)
By Nicole Mordant
VANCOUVER Nov 30 A housing shortage, not a rush
of foreign demand, is probably driving up Canadian property
prices, the country's housing agency chief said on Wednesday, as
he warned against blaming overseas buyers for the decade-long
New government data shows foreign ownership is only a small
factor behind the high prices, Canada Mortgage and Housing Corp
(CMHC) Chief Executive Evan Siddall said in a speech at the
Greater Vancouver Chamber of Commerce.
Foreigners have been blamed for driving up prices,
particularly in Vancouver, Canada's most expensive housing
market, where locals believe wealthy Chinese buyers have made
housing unaffordable for ordinary Canadians.
But that may be a case more of perception than reality,
Siddall told an audience in Vancouver. "When a white person buys
a house, we don't notice. When a person of color buys a house,
we do. That's not good economics," he said.
The housing agency said in a report on Wednesday that
foreign ownership of Canadian condominiums dropped in 2016 after
the introduction of a foreign buyers tax in Vancouver, and
remains a fraction of overall ownership, concentrated mostly in
The share of foreign ownership fell to 2.2 percent in
Vancouver in 2016 from 3.5 percent in 2015, the agency said,
suggesting that the August introduction of a 15 percent tax on
foreign buyers in that city had dampened demand.
Buyers did not appear to have shifted to other cities where
the tax was not imposed, as some analysts had predicted, with
foreign ownership falling to 2.3 percent in Toronto from 3.3
percent a year earlier.
Siddall said the most important factor driving up home
prices was a supply shortage, particularly in Vancouver, along
with rising disposable incomes, immigration and lower mortgage
He urged municipalities to increase housing supply by, for
example, speeding up housing development approvals.
Demand by foreigners for Vancouver-area homes dropped almost
immediately after British Columbia imposed the tax on such
purchases, but it crept back up in October.
The government has moved in recent years to cool the market,
mostly among buyers, by tightening mortgage rules to make it
harder to take on too much debt.
Siddall said the most recent tightening, announced on Oct.
3, has resulted in a "slight slowdown in activity" for the CMHC,
which insures the bulk of mortgages issued by banks and other
lenders. The new rules affect less than one-third of CMHC's
business, he said.
(Reporting by Andrea Hopkins; Editing by Richard Chang and