While CMHC and others move towards quantifying data around foreign investment in Canada’s housing market, it is important those efforts not be seen as open season on international buyers, caution analysts.
“It’s a bit touchy in the sense that it should not be perceived as a witch hunt or looking for scapegoats,” says Robert Hogue, senior economist at the Royal Bank of Canada. “It has to be done in a constructive manner, in the sense that we just want to quantify this particular phenomenon.
“It should not be perceived as trying to dissuade foreign investment in Canada.”
In a discussion with The Canadian Club in Toronto earlier this week, president of the Canadian Mortgage and Housing Association (CMHC), Evan Siddall, acknowledged there might be a data gap when it comes to the degree of foreign ownership in the marketplace.
Economists have no doubt that a data gap exists, pointing to the need to quantify this information in order to determine the impact on Canadian investors.
“We have very little hard facts on that particular phenomenon,” continues Hogue. “There are a lot of anecdotes out there, but essentially no hard statistics.
“With respect to the impact on the market, it’s not clear. The data gap is not necessarily a concern, but since it’s not measured formerly, we don’t know if it is a significant or material phenomenon. The concern there is more around the fact that it creates uncertainty and we don’t know if we should worry about it or not.”
Countries such as Australia and the U.S. do quantify information about overseas buyers, but Canada is lagging behind, particularly in hot markets such as Vancouver and Toronto, where this type of data would be useful to investors.
“We suspect it is a significant phenomenon, particularly in Vancouver, and to a degree in Toronto,” says Hogue. “But the anecdotes out there go from anywhere from 5 per cent of buyers to 30 per cent or more.”
Siddall said the research arm of CMHC is tackling the foreign ownership issue and looking for more data from the banks. He added: “We actually have a team inside the corporation looking at our data gaps and assessing those.”
But should it be the responsibility of CMHC to collate this data? In the U.S., the National Association of Realtors surveys its membership to get an estimate of the amount of foreign investment in its housing market.
Homebuilders, realtors and even the banks would have to work together to collate this information in Canada, says Sal Guatieri, senior economist, vice-president, Economic Research at BMO Capital Markets.
“I’m not quite sure why there is that gap in Canada,” he adds. “It will take a combined effort of many groups to get a somewhat accurate figure.”
Foreign investment in Canada’s housing market is currently only anecdotal at best, so it will take a lot more work from the industry to provide more details to Canadian investors.
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