Photo: Wallace Freitas/Flickr
When foreign investors are in the market for a Toronto condo, they are most likely to purchase a unit in a shiny new building — or at least a recently constructed one — suggests new data from Canada Mortgage and Housing Corporation (CMHC).
The national housing agency recently drilled down into foreign ownership levels in major Canadian real estate markets, looking in particular at the share of non-resident owners in buildings constructed from before 1990 to 2015.
CMHC noticed a trend when comparing ownership in older residential buildings to those that were completed since 2010.
“Foreign ownership is most prominent in newer condominium apartment structures in Toronto and to a lesser extent in the Vancouver Census Metropolitan Areas,” it said in its latest Housing Market Insight published this week.
“The Toronto CMA is where analysis by the age of the building provides the most interest insights into foreign buyers’ activities,” CMHC continued.
In the Toronto Census Metro Area, condo developments that predate 2000 had a foreign ownership share less than 2 per cent in 2015. For buildings completed since 2010, however, the share of foreign ownership rises to 7 per cent that year.
For CMHC’s purposes, a foreign buyer is someone whose primary residence isn’t Canada — even if they are Canadian.
Levels are higher in Toronto Centre, where 10.1 per cent of condos completed since 2010 have been purchased by foreign buyers.
The national housing agency pegs the level of foreign ownership across all condo buildings in the Toronto CMA last year at 3.3 per cent, or 338,843 units, up from 2.4 per cent in 2014.
These are figures CMHC first released in December, having arrived at this conclusion via a survey of property managers.
The newest condo buildings in the Vancouver CMA also have the highest level of foreign ownership, as CMHC noted.
Some 6 per cent of the units in these projects wrapped up between 2010 and 2015 were foreign-owned, compared to 1.4 per cent of the units in developments completed prior to 1990.
The overall foreign condo ownership rate in Vancouver was 3.5 per cent last year, representing 210,696 units, a 2.3 per cent increase from 2014.
Of the year-over-year rise in foreign condo ownership tracked in Canada’s two hottest markets, CMHC highlights the role the recent ramping up of housing construction has played.
“A surge in completion of new condominium buildings substantially increased the total number of units that were covered in the 2015 survey compared to the 2014 survey,” explained CMHC.
Bob Dugan, the national housing agency’s chief economist, said in a statement that the report is “another piece in the puzzle of foreign investment in Canada.”
Because CMHC has depended upon building owners and property managers for insight into which units are owned by foreign buyers, its efforts have been limited by how helpful sources are in providing information, CBC News reports.
When Bill Morneau, Canada’s Finance Minister, announced the 2016 federal budget, he pointed to the need for more information on foreign investment in the country’s housing market.
To address this, the federal government has set aside $500,000 for Statistics Canada to “develop methods for gathering data on the purchases of Canadian housing by foreign homebuyers,” according to its budget website.
However, some observers have questioned whether that amount, less than the average price of a Canadian home, is enough.
For its part, CMHC, which has acknowledged more data is needed, is getting in touch with tax authorities as well as police agencies focused on combatting money laundering, according to CBC News.
“It remains a top priority for CMHC to continue to get more information on foreign investment in Canada’s housing market,” Dugan added in his statement.