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Real estate broker Tony Ma, centre, and his client Mr. Zhang from China, left, and agent Lillian Wang pose for a photo after a home tour Oct. 29, 2012, in North York. (Moe Doiron/The Globe and Mail)
Real estate broker Tony Ma, centre, and his client Mr. Zhang from China, left, and agent Lillian Wang pose for a photo after a home tour Oct. 29, 2012, in North York. (Moe Doiron/The Globe and Mail)

real estate

Crucial bit of missing information may be driving Canadian home prices Add to ...

It’s a contrast to Canada. CMHC does not monitor or compile data on foreign investors. Its mortgage loan insurance isn’t available for foreign buyers, meaning someone outside the country would need a down payment of at least 20 per cent, and have to get conventional financing . The Canadian Bankers Association doesn’t keep data on this. Nor does the Canadian Real Estate Association. The Bank of Canada doesn’t track it, though Governor Mark Carney has noted that heavy investor demand – much of it foreign – “reinforces the possibility of an overshoot in the condo market in some major cities.”

He has implied that the bank could compile data if it chose to. “We have, through partners, access to all mortgage insurance transactions and all real estate, effectively all real estate transactions, the residency of those transactions, and we can do deeper drills in various areas, if we wish, to establish that.”

As for the federal government, Finance Minister Jim Flaherty told The Globe and Mail last April that it doesn’t have a good handle on the amount of foreign money in the country’s 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 .

Monitoring foreign buying in Canada poses challenges. Some buyers purchase homes through local family or a lawyer’s office, so on paper they appear to be living in the country. Plus there may be privacy concerns around asking buyers where they come from or why they’re buying.

Still, Lawrence Kobescak, mortgage agent at Ontario Mortgage Superstore.com, is among many who’d like more clarity on the trends. “Without a clear picture of foreign ownership in the residential market in Canada, we cannot predict the impact shifting foreign investor sentiment may have on the Canadian housing market,” he said.

For example, it’s tough to gauge whether Canada’s hot market since 2008 partly stemmed from a flight to security by foreign investors. Conversely, a global recovery could spur interest rate hikes, put the squeeze among foreign investors’ returns and cause them to retrench. “Without accurate statistics of foreign ownership of residential properties in 2008 and in 2012, we would only be guessing.”

International interest in Canadian property is unlikely to abate any time soon. Volatile stock markets and Canada’s reputation for economic stability are luring investors. So are housing prices that are still lower than other major global centres. And, unlike many countries such as Australia and Switzerland, foreigners face no restrictions on home buying.

Interest in Canadian residential real estate among foreign buyers has been steady in recent years, with particular interest from Asia, says Luis Lopez, head of business development, credit, international private banking for RBC Wealth Management. “The investment dollars are coming here and we are seeing them stay here, it is not for the short term,” he said. adding that “much remains to be seen” on how China’s slowdown will affect real-estate markets in Vancouver and Toronto .

There’s also more wealth sloshing around, looking for a safe place to park. Globally, 175,000 people crossed the millionaire threshold last year, led by growth in emerging markets like China and India, according to Boston Consulting. In China alone, the number of millionaires hit 1.4-million in 2011 from 1.2-million the year before, and that number will keep growing “strongly” in the coming years, it said. Investors from mainland China tend to see Canada as one of the top destinations for real-estate investment, according to real estate services provider Colliers International.

“Most Mainland Chinese investors buy properties in Canada because their children study there,” said Derek Lai, director of international properties, last year. “Now we also witness an emerging trend of younger buyers, such as Chinese students, purchasing bigger apartments or luxury properties.”

Foreign appetite for Canadian homes will persist, says Michael Adelson, Toronto-based sales rep for ReMax Realtron, who recently represented a seller that sold their bungalow for $421,800 over asking to a foreign buyer.

He has worked in the industry for 25 years, and seen interest from Hong Kong, Korea and Iran flourish. As someone in the industry, he’s happy to see such strong demand. As a citizen, he’s worried some local people might be getting priced out of the market.

“People have recognized this is a relatively cheap country to buy,” he says. “I think it will continue unless they put some controls in place.”

Tony Ma agrees. The agent in Markham, Ont., has hosted several groups of visiting Chinese buyers in recent months alone. They typically buy a house for $1-million or $2-million, either to live or as an offshore investment. Canada’s multicultural communities, affordability and democratic system will continue to lure buyers, he says. “I don’t see this market cooling any time soon.”

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