Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

A sign advertises a house for sale on a residential street in midtown Toronto on July 12, 2017. In the four months after the Ontario government began charging a 15-per-cent tax on residential purchases by foreign buyers in the Toronto region, non-citizens paid on average $977,611 for homes compared with $659,470 for Canadians and permanent residents.


Foreign home buyers spent an average of almost 50 per cent more per real estate transaction in the Toronto region than Canadians in recent months, according to previously unreleased government data.

The data, obtained by The Globe and Mail through a Freedom of Information request, bolster concerns that international investors drive up housing prices, the most contentious issue in the debate over the effects of foreign capital on real estate.

In the four months after the Ontario government began charging a 15-per-cent tax on residential purchases by foreign buyers in the Toronto region, non-citizens paid on average $977,611 for homes compared with $659,470 for Canadians and permanent residents – or 48.2-per-cent higher.

Story continues below advertisement

The Globe also obtained government statistics on the citizenship of foreign buyers in the same period, showing 70.6 per cent were from China. Trailing in second place were Americans, at 4.6 per cent, followed by buyers from India, at 3.6 per cent.

After a public outcry about the role of international speculators in the Toronto area's skyrocketing real estate prices – which were up by a dizzying 33 per cent in March compared with a year earlier – Premier Kathleen Wynne's government implemented a foreign-buyers tax as part of a package of measures designed to cool the market. The province also began tracking international property investment.

Many housing analysts argue foreign investors, especially from China, have been a major factor in price escalation. "This is the dominant dynamic at play," said Josh Gordon, a professor at Simon Fraser University who researches Toronto and Vancouver's housing markets.

Figures from the B.C. government also show foreign buyers paid more for homes in Metro Vancouver, although the spread is much narrower than in Toronto. The average price for residential property transactions involving foreign purchasers was $1,065,444 in October compared with an average of $958,701 for Canadians and permanent residents – a difference of 11.1 per cent.

Experts say it is difficult to pinpoint the relationship between an influx of foreign capital and housing prices given the absence of comprehensive data and the lack of a universally accepted economic model that translates market share into price impact. A U.S. study that examined out-of-town second-home buyers in several cities in the 2000s found that every percentage-point increase in the fraction of sales to non-locals in a given month was linked to a 1.9-percentage-point increase in price appreciation over the following year.

For its part, the real estate industry, which opposed foreign-buyers taxes, has long insisted that international investment is a minor factor in Toronto's housing market, saying the real challenge is a lack of supply of homes.

Benjamin Tal, deputy chief economist at CIBC, agrees that supply issues are important but said foreign buyers play a key role in driving up real estate prices, especially in high-demand pockets such as the downtown. "It does impact affordability within that space," he said.

Story continues below advertisement

As the Ontario government's average price data suggest, analysts and real estate agents say foreign home buying is largely concentrated at the high end of the market.

Despite this, international investors create "potent ripple effects" which push up prices for buyers at all rungs of the property ladder, Prof. Gordon said. This occurs, he says, because wealthy foreign buyers tend to price local affluent residents out of high-end neighbourhoods, pushing them to second-tier areas. The effect repeats itself in lower-priced categories, edging locals who would have bought in secondary neighbourhoods into other, less desirable areas, and so on. At the same time, demand is higher because of an influx of non-residents.

"Ultimately, it will drive up prices rapidly and intensify the competition for housing," he said. "It starts in the high end, but then it spreads in its effect in the whole area."

In addition, Prof. Gordon said that when foreign buyers win bidding wars with outsized offers, they set benchmark comparable prices that real estate agents rely on for future transactions, which also increases costs.

John Pasalis, a Toronto broker who analyses industry statistics, said he was surprised at the spread between the average home prices for foreign and Canadian home buyers. He noted that many international investors buy condos, which would pull the average home value down, given they tend to be cheaper than houses. "It's interesting that it's such a significant difference … which is crazy."

Mr. Pasalis also said part of the region's recent price escalation is due to domestic speculators clamouring to buy multiple properties on the assumption that real estate prices would continue to rise.

Story continues below advertisement

Andy Yan, an urban planner who teaches at the University of British Columbia and Simon Fraser University, sees three connected factors that affect real estate prices: foreign capital from international investors, cheap capital in the form of low-interest mortgages and fast capital, such as from flipping and speculating.

"It's a series of factors that play into each other. Everyone's looking for the single issue, the single element and that's been a huge problem. It actually is how multiple elements work together. They come together to produce the kind of pricing market that you have here."

Despite releasing other data on foreign home buying, the Ontario government has not previously provided a breakdown of average home prices and buyers' citizenship. The province said median home prices were not available because no analysis had been performed.

The figures for average home prices paid by foreign and Canadian buyers cover sales of residential properties in the area known as the Greater Golden Horseshoe region, which spans from Niagara to Peterborough, for the period April 24 to Aug. 18. (The foreign transaction figure does not include the government's 15-per-cent tax.)

Using other government data, The Globe determined that 3.5 per cent of residential properties sold in the region between April 24 and Aug. 18 were to foreign buyers, or 2,988 out of a total of 84,716 transactions. In the city of Toronto, 6.1 per cent of homes were bought by international citizens.

The rate of foreign home buying in the Toronto region has dropped since the government's tax was implemented in late April. According to new government figures, 1.9 per cent of residential properties in the region were bought by non-citizens between mid-August and mid-November. In Toronto, 3.8 per cent of homes were purchased by foreign buyers.

Story continues below advertisement

Prices in the GTA have fallen 17 per cent on average from the market's peak in April, according to the Toronto Real Estate Board.

Statistic Canada released data showing that foreign ownership in Toronto and Vancouver are less than five per cent.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to
Comments are closed

We have closed comments on this story for legal reasons or for abuse. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies