TORONTO — Concerns about foreign investors snapping up real estate have dominated headlines recently, but a new report suggests domestic investors outnumber foreign buyers in the Greater Toronto Area's new condo market ten-to-one.
Toronto condo research firm Urbanation says foreign buyers, whose primary residence is outside of Canada, made up only five per cent of the sales of new units in condo buildings that were under development between July and September.
Meanwhile, domestic investors — those whose primary residence is in Canada but who don't plan on living in the unit — made up 52 per cent of the sales.
The remaining 43 per cent of new condos sold in the Toronto area went to locals who plan to live in the properties, according to the firm.
"The results of this very important survey show a rather limited role of foreign buyers in the GTA new condo market and a very significant overall share of (domestic) investors," Shaun Hildebrand, Urbanation's senior vice-president, said in a news release.
"These estimates coincide with the percentages of new condos entering the rental market upon completion, indicating the important role (domestic) investors play in the GTA housing market."
The survey is based on responses from developers and brokerages representing a quarter of all new condo apartment units sales. Only projects that were in development — meaning either in pre-construction, construction or recently completed — were included in the data.
It's the first time that the research firm has looked into the presence of non-resident buyers in Toronto's new condo market.
Data on the presence of foreign investment in Canada's real estate markets is scant, making it hard to quantify the issue. While some research does exist, it's generally limited to the condo market and does not include other forms of housing.
A report from Canada Mortgage and Housing Corp. published earlier this year found only 3.3 per cent of Toronto condos are owned by foreigners, while in Vancouver 3.5 per cent of condos are foreign-owned. The numbers are somewhat higher for newer condos.
There has been a push to fill the foreign buyer data gap in recent months. In its first budget since being elected, the Liberal government gave Statistics Canada $500,000 to study how to best gather information on home purchases by foreigners.
In August, the B.C. government introduced a 15 per cent tax on home purchases by foreigners in Metro Vancouver.
Much of the concern about foreign investors has been predicated on fears that they're driving up real estate values and therefore pricing locals out of the market.
Given the lack of data, it's impossible to say with certainty how much of an impact foreign buyers are having on home prices in red-hot markets like Toronto and Vancouver.
Hildebrand says the foreign buyers and domestic investors identified in Urbanation's survey are not speculators who snap up properties looking to make a quick buck.
"I don't think that in either case we are seeing speculative activity, whether it be from foreign purchasers or domestic investors," Hildebrand said in an interview.
Unlike the prices of single family homes, which have been skyrocketing in Toronto and Vancouver recently, new condo prices in Toronto have been growing much more modestly, he said.
"We see very few units reselling after completion. By far, the majority of these units are going into the rental market. These are longer term investors."
