High housing prices in the Vancouver region stem from a variety of factors, with foreign buyers shouldering a disproportionate amount of blame, says the president of Canada Mortgage and Housing Corp.
Evan Siddall said he is concerned about "unhealthy tensions" pitting existing residents against recent arrivals, and also older homeowners against younger families priced out of the market.
"Who is to blame for Vancouver's affordability problems? To some, the scapegoat is obvious – blame foreigners," Mr. Siddall said Wednesday in prepared remarks to the Greater Vancouver Board of Trade.
"While it would be convenient to hang all of the blame for high prices on others – offshore buyers – it's just not that simple. Sure, it makes for a tempting narrative. Them, not us. And while foreign investment clearly is a factor, it is not the only one."
Mr. Siddall listed a wide range of factors that he sees as contributors to Vancouver's expensive real estate: domestic residential investing, population and economic growth, low interest rates and housing supply constraints.
Some industry observers argue that buyers from China are the primary drivers behind Vancouver's housing boom that spilled into the suburbs.
Mr. Siddall said evidence points to housing investor activity in Canada originating from predominantly domestic sources, yet foreign investment is often seen as the culprit in Vancouver. Going off script, he added: "When a white person buys a house, we don't notice. If somebody of a different colour does, we do. And that's not good economics."
During a news conference after his speech, Mr. Siddall said the debate over housing affordability is contentious. "This contrast between us and them is a factor. We notice things that are different better than we notice things that are similar," he said.
The CMHC president added that the federal government has policy tools, with the Minister of Finance knowing not to use economic stimulus to unduly influence the real estate market.
"Our analysis confirms that the most important factors accounting for house price increases over the long term are economic," Mr. Siddall said in his prepared speech. "We believe two income-related factors are at play: An increase in high-paying jobs and a tendency of these jobs to concentrate in cities. This is an important and statistically robust factor in Toronto, less so in Vancouver. The impact in Vancouver may differ because wealth, rather than income, could play a much more pronounced part here."
The B.C. government implemented a 15-per-cent tax on foreign buyers in Metro Vancouver in August. On Tuesday, the province said purchasers who are not Canadian citizens or permanent residents accounted for 7.1 per cent of the total deals in Metro Vancouver closed between June 10 and Oct. 31.
British Columbia, which began collecting data on June 10 on foreign purchasers, noted that in the seven weeks leading up to the tax's implementation on Aug. 2, foreign purchasers accounted for 13.2 per cent of the region's total. The regional statistics, including transactions that involve buyers from China, are based on closed deals registered with the province's land title office.
The price for detached houses sold in October within the City of Vancouver averaged more than $2.6-million, or double the average price for detached properties in the City of Toronto. The market in and around Vancouver remains the most expensive in Canada, despite prices dropping recently for detached houses, condos and townhomes.
"Our attachment to low-density single-family housing in many neighbourhoods represents regressive urban planning and makes the problem worse. This is basic economics. The more we hold back supply, the faster prices will rise in response to increased demand. And Vancouver's supply response is among the weakest in Canada," Mr. Siddall said in his speech.
In a new survey released on Wednesday, CMHC said the share of foreign buyers in Canada's major markets is still low. The federal housing agency said foreign condo ownership in the metropolitan area of Vancouver has declined to 2.2 per cent in its latest survey of property managers and condo boards, compared with 3.5 per cent in the fall of 2015. In the Toronto region, the proportion of condos owned by people whose primary residence is outside of the country decreased to 2.3 per cent from 3.3 per cent, while dropping to 1.1 per cent from 1.3 per cent in the Montreal area.
Beyond the three largest markets, CMHC found that the share of international condo buyers has remained small in places such as Saskatoon, Regina, Edmonton, Calgary and Halifax.
International buyers continue to favour units in newer condo buildings, said CMHC, which is seeking more data on non-resident purchasers.
"Foreign ownership is just one factor influencing Canada's housing markets, but it's an important one that continues to gain attention," CMHC chief economist Bob Dugan said in a statement. "We continue to work with our partners in finding new ways to bring this important story into sharper focus."