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Foreign buyers gobbling up more of Canada’s luxury homes

File photo of a luxury home under construction in Ontario.

Kevin Van Paassen/The Globe and Mail

Foreign buyers are gobbling up more and more of Canada's high-end houses, a new report suggests.

Such buyers are now believed to hold about 25 per cent of some luxury markets, according to the Royal LePage Carriage Trade luxury properties report released Thursday.

The report adds to a mounting controversy over foreign buyers amid ever-rising prices, and huge affordability issues, in hot real estate markets such as Vancouver and Toronto.

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So much so that the British Columbia government is moving to get a handle on it amid mounting affordability issues.

The Royal LePage survey polled real estate advisers across the country, 66 per cent of whom said foreign buyers have become a bigger presence over the past decade.

"Almost a quarter (24 per cent) of advisers surveyed believe that 25 per cent or more of luxury properties in their area are purchased by foreign buyers," the report said.

"Over half of the advisers polled (51 per cent) cited China as the primary international region generating real estate purchases in Canada."

Most of the advisers believe buyers are using those properties as their primary homes, rather than as investments.

The Royal LePage survey came just before a monthly reading showing Canadian home prices surging again in April, though driven largely by Vancouver, Toronto and Montreal.

National prices rose 1.2 per cent in April from March, marking the strongest April since 2008, according to the Teranet-National Bank home price index.

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Prices rose 2.2 per cent in Vancouver, 1.4 per cent in Toronto and 1.1 per cent in Montreal.

The annual price gains are eye-popping: Almost 20 per cent in Vancouver, almost 12 per cent in Hamilton, 10.5 per cent in Toronto and 9.2 per cent in Victoria.

Prices in Calgary and Edmonton, which have been hit by the oil shock, were down on an annual basis by 3.7 per cent and 1.3 per cent, respectively.

"For those living in Vancouver, Victoria, Toronto and Hamilton, the housing boom continues," National Bank's Marc Pinsonneault said.

"Quite a contrast with the seven other metropolitan areas covered by the index, where prices have on average declined on a year-over-year basis."

Mr. Pinsonneault said some observers will blame foreign buyers for helping to boost prices in Vancouver and Toronto, but "it's worth noting those cities are also blessed with the strongest labour markets in the country and hence are able to accommodate large migration flows."

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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