December 19, 2017 / 1:52 PM / in 6 months

Non-residents focus on new condos in Vancouver, Toronto

OTTAWA/VANCOUVER (Reuters) - Foreign investment in Canada’s hottest housing markets is low and stable, Statistics Canada said on Tuesday, but data showed non-resident buyers were driving the newest and most-expensive segments of the market, particularly condos, in Vancouver and Toronto.

FILE PHOTO: A crane towers over a condominium construction site in Toronto, Ontario, Canada December 2, 2017. REUTERS/Chris Helgren/File Photo

Non-residents owned 3.4 percent of Toronto residential properties and 4.8 percent of Vancouver’s housing stock as of mid-2017, Statscan said. But when new-built condos were isolated, the number of non-resident owners jumped sharply, suggesting overseas investment is driving the hottest segment of the market.

Non-residents, defined as those whose principal residence is outside of Canada, owned 15.5 percent of condos built in 2016-2017 in Vancouver, and 11.3 percent in Toronto, Statscan data showed.

“These numbers confirm what a lot of people have been suspecting is happening, particularly in new-builds,” said Andy Yan, director of The City Program at Simon Fraser University in Vancouver, who first noted the trend. Reuters confirmed the findings with Statscan.

FILE PHOTO: A Canadian flag hangs from the deck of a house for sale in Ottawa, Ontario, Canada, August 15, 2017. REUTERS/Chris Wattie/File Photo

Yan also said the data does not fully capture the impact of foreign money, nor the impact of domestic and foreign speculation, because it focuses on the owners, rather than where the money comes from.

A voter backlash against foreign buyers, particularly those from China, spurred provincial governments to impose a 15 percent tax on home purchases by non-residents in Vancouver in 2016 and Toronto in 2017.

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The report showed non-residents owned more condos than detached homes, and tended to own more expensive homes than those owned by residents.

The report also showed non-residents tended to own newer and smaller condos in Toronto than those owned by residents, which has been blamed for fueling a building boom of small condos designed for investors, not residents, in mind.

The data is likely to spur continued debate about the housing booms in Toronto and Vancouver, which cooled after the foreign buyers tax was imposed but have shown some signs of a rebound since.

Prices surged 173.7 percent in Vancouver from January 2005 to November 2017, according to the Canadian Real Estate Association’s housing price index, while Toronto prices are up 145.0 percent in the same period.

In the last three years alone, Vancouver prices have risen more than 60 percent, while Toronto prices are up more than 40 percent, sparking fears of a bubble.

Reporting by Andrea Hopkins; Editing by David Gregorio and Chris Reese

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