Are foreign investors driving up Canada's housing prices?

As debate heats up about the degree to which Toronto and Vancouver's housing markets are overheated, there is a lot of talk about the role that foreign investment money is playing.

And it's a bit frightening to realize that not even the government knows the answer.

During a discussion with the Globe and Mail's editorial board, Finance Minister Jim Flaherty acknowledged that Ottawa doesn't have a good grasp on the amount of foreign money in the Canadian housing market.

"It's mainly anecdotal, so I don't have a statistical grasp of it, no," he said, adding that he hears about lots of people in emerging economies paying cash for condos in Toronto and Vancouver.

A number of economists worry that foreign speculators are driving up the price of condos.

Bank of Montreal chief economist Sherry Cooper said in a note Friday that, while Toronto's condo boom still pales in comparison to what's happened in Spain or the U.S., lessons must be learned from those experiences.

And one of those lessons? The role of foreign investment.

"For nearly a decade starting in 1999, house prices exploded in Spain as both domestic buyers, and more notably, foreign buyers poured money into residential real estate," Ms. Cooper wrote. "Europeans, Russians and others were using the Costa del Sol as their vacation hideaway and condo building in all parts of Spain exploded."

Canada's not known as a vacation hideaway, but real estate agents have tales about foreign investors scooping up literally dozens of condo units at one time – tales that, if true, suggest there's a fair degree of speculation in the market.