Foreigners are snapping up more real estate in the Montreal area, but the top executive of National Bank of Canada says supply and demand for housing are still "in balance" in the country's second-largest city.
Chief executive officer Louis Vachon said Friday non-resident buyers are gravitating to three upscale or Anglophone neighbourhoods in and around Montreal: Mount Royal, the affluent enclave of Westmount and the West Island.
"We've seen, in some of these markets, up to 20 to 30 per cent of the new buyers have been non-resident buyers," Mr. Vachon added in a phone interview Friday after the bank's annual shareholders meeting in Montreal. "But, so far, it's not been big enough to throw the market out of equilibrium."
His comments come one day after the Ontario government unveiled a 16-point package that aims to curb runaway home prices in the overheated Greater Toronto Area market. The measures include a 15-per-cent tax on foreign buyers, as well as the green light to Toronto, and potentially other nearby cities, to introduce a property tax on vacant homes.
Politicians in Ontario are following a path blazed by their colleagues in British Columbia and Vancouver, who introduced similar rules last year in a bid to restore housing affordability.
Mr. Vachon, who heads up the smallest of the Big Six lenders, welcomed the steps Ontario is taking, adding that they did not come as a surprise. National Bank is more exposed to Quebec than it is to Ontario.
At the end of the first-quarter, National Bank said 55 per cent of its residential mortgage portfolio consisted of loans extended in Quebec. Ontario made up 25 per cent, while Alberta compromised 8 per cent.
National Bank has been changing how it originates mortgages. Last year, it opted to consolidate its relationship with third-party mortgage brokers to a single provider – Toronto-based Paradigm Quest Inc. – and bolstered its risk parameters for residential lending in Ontario.
But Mr. Vachon says the Montreal market is not built the same way as Toronto and Vancouver. Mainly, it has fewer land constraints for building and lower immigration targets.
The Quebec Federation of Real Estate Boards echoed Mr. Vachon's remarks Friday in a press release, saying the new rules in Ontario could increase the presence of non-resident buyers in Montreal, but that it "does not expect any major short-term impacts."
But it said just 1.5 per cent of home buyers in Montreal are foreign, citing data from Canada Mortgage and Housing Corporation. In comparison, it said the B.C. government estimates the proportion of foreign buyers in the Vancouver area is 9.7 per cent, while the Toronto Real Estate Board estimates this figure is nearly 5 per cent in the Toronto area.
Policy makers across the country have been paying close attention to home prices in their cities and towns, as locals are getting shut out of the market. Quebec Finance Minister Carlos Leitao said in an earlier interview that the province has "a well-functioning, balanced" housing market. He added that he welcomes foreign investment in real estate – just not speculation.
"Housing is affordable in Quebec and Montreal," he said. "We want it to remain that way."
With a report from Nicolas Van Praet
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