Photo: Sviatlana Yermakovich/Flickr
The chief economist of one of Canada’s Big Six banks has made clear his opinion of those who downplay the impact foreign investors have had on home prices in the Greater Toronto Area.
“Some would argue that non-resident investors were not a big deal in the market. (Some would also argue that the earth is flat.),” writes BMO Chief Economist Douglas Porter in a Monty Python-referencing note published today.
Numbers being his game, Porter provides a couple of examples to explain his unconcealed disdain for the doubters out there.
On a seasonally adjusted basis, the overall value of home sales in York Region and Oakville-Milton nosedived 65 per cent and 53 per cent, respectively, in the four months following Ontario’s late-April announcement of a foreign-homebuyer tax for the Greater Golden Horseshoe.
“We would simply point out that these two regions were heavily influenced by non-resident buyers,” Porter continues.
According to the most recent available government data, between April 24 and May 26 foreign buyers accounted for 9.1 per cent share of home purchases in York, well above the 4.7 per cent share observed throughout the entire Greater Golden Horseshoe.
The Ontario Ministry of Finance’s website does not have a specific breakdown for Oakville-Milton, instead only offering data for the entire Halton Region, where foreign buyers were tied to 3.7 per cent of the sales recorded.
Ontario has plans to release more data in the fall, but a spokesperson tells BuzzBuzzNews that no date has been set yet.
Table: Ontario Ministry of Finance
The part foreign investors have been playing in the GTA market is also apparent when breaking down national numbers, Porter suggests.
Home sales have dropped 27 per cent on a year-over-year basis in regions where a foreign-homebuyer tax has been introduced, compared to an annual downtick of less than 1 per cent elsewhere.
In the Greater Toronto Area alone, home sales dropped 5.4 per cent from June to July, as prices fell 4.6 per cent, according to the Canadian Real Estate Association.
“This is a late bubble. Bereft of life, it rests in peace,” writes Porter, paying tribute to the comedy collective’s dead parrot sketch. “With apologies to Monty Python, we shall stop there.”