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Condos in the Gilmore area of Burnaby are seen in the distance behind houses in east Vancouver, B.C.DARRYL DYCK/The Globe and Mail

Ottawa's attempts to track foreign investment in the housing market are likely to be hampered by realtors' reluctance to share information on overseas clients, industry players told closed-door meetings with the country's housing regulator.

"The [real estate] industry needs assurances why data on foreign investment will be collected and how it will be used," Toronto-area realtors and developers told Canada Mortgage and Housing Corp., according to summaries of meetings CMHC held with key industry players obtained by The Globe and Mail through an Access to Information request. "Foreign buyers are sensitive to too many questions being asked."

As part of its search for data on the role of foreign investors in driving up housing prices in Canada's major cities, CMHC held talks with realtors and developers in Vancouver, Toronto and Montreal in the spring.

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The off-the-record meetings were meant to be "a frank, open and lively exchange of perspectives and ideas," CMHC wrote in its invitation to the industry. The Crown corporation provided summaries of the discussions, but did not identify any of the participants.

In the Toronto area, where prices for detached houses have jumped more than 27 per cent from a year earlier, real estate professionals appeared more resistant to the government's efforts to collect data than their Vancouver counterparts did, the documents show.

"Many were curious as to what share of foreign buyers CMHC considered a problem," CMHC wrote. "Many hoped that any data collected by CMHC will not be used to say that there is a problem."

Toronto realtors told CMHC they keep records on the identities of buyers and supply that information to the Financial Transactions and Reports Analysis Centre of Canada, which investigates money laundering, but they don't want to be seen to be policing the real estate market. "Realtors are concerned about privacy and are mindful of what they pass along to FINTRAC," some industry players told CMHC. Others "expressed doubt about the accuracy of FINTRAC data."

Toronto real estate professionals also told CMHC that foreign investors are abandoning the new condo market and buying into new single-family housing projects "due to the perception that low-rise units are easier to flip given their shorter completion times."

Foreign buyers have also begun branching out into other markets in the Golden Horseshoe, such as Hamilton, Kitchener and Niagara, industry players told the CMHC.

In Vancouver, the meeting took place in early June, before the B.C. government introduced a surprise 15-per-cent tax on housing sales to foreigners in the Metro Vancouver area. The average price of a detached house in the region has slipped 11 per cent since January.

Some Vancouver industry officials told CMHC the organization should ask realtors to provide details of private sales – those not recorded in the local real estate boards' Multiple Listings Service database – and should focus on the flow of funds coming from overseas, rather than the nationality of the buyers.

Foreign real estate purchases involved "an elusive reality where funds moved in mysterious ways," Vancouver participants said.

The prevalence of undocumented and sometimes illegal funds flowing into real estate would present "an enormous challenge" to the government's data-collection efforts, real estate professionals warned. It would be exacerbated by lenders who offered "blanket loans" for real estate purchases with little income documentation in hopes of winning more business from wealthy international clientele.

One unidentified participant described the process of moving money to Canada from overseas as "put money in an account for 60 days and it is considered 'clean.'"

Several warned that efforts by the Chinese government to crack down on the amount of money flowing out of China would have an impact on Vancouver's housing market. Others pointed out that after Canada lifted some sanctions against Iran earlier this year, money began flowing into the West Vancouver housing market, usually by way of local buyers.

CMHC's push into foreign real estate transactions came as the federal Liberal government gave the housing agency an official mandate to investigate "the causes of the rapid and recurring rise in property prices in major urban centres across Canada, over the short and medium term, since 2010." In a June 27 letter to CMHC, Minister of Families, Children and Social Development Jean-Yves Duclos said Ottawa wanted to "intervene quickly" in the market, adding that "much remains to be done to meet the expectations of Canadians and those of Mr. Trudeau."

The Toronto Real Estate Board said it is planning to release the findings of its own survey on foreign buying activity in the Greater Toronto housing market in January.

For its part, CMHC's own internal assessments have found that existing studies of foreign buyers paint an "inconsistent picture," with many suggesting offshore investors are influencing only a small part of the Canadian housing market, while a few point to "a large proportion of sales to foreigners, particularly in higher-priced neighbourhoods of Toronto and Vancouver."

The real estate industry itself is divided on the issue, the documents show. Some realtors said they were concerned that rising housing prices were pushing young Canadians into dangerous levels of debt. Others said foreign investment was critical to the economy. "[The] real estate business is the only business this city really has," one Vancouver participant told CMHC. Another described Vancouver as "a great place for families with $15-million."

Summaries of the Montreal meeting were not made available.

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