What impact would a clampdown on foreign investment have?

Measures to cut back on financing foreign-purchased real estate will have little impact on market, according to one leading mortgage broker.

After three Australian banks made the move to eliminate financing for foreign buyers, we asked a leading broker what the chances were of similar practices being adopted by Canadian lenders.

Slim-to-none, it turns out.

“What percentage of foreign buyers require financing? If you’re going to look at eliniating financing for foreign buyers, as an institution, I think they would look at it and realize represents less than 3% of their book of business,” Dustan Woodhouse, a B.C.-based broker with Dominion Lending Centres, said.

A small percentage that, if eliminated, would have little to no impact on the housing market.

The Canada Mortgage and Housing Corporation recently released a report on foreign ownership that estimated the influence of foreign money on two of the country’s hottest housing markets.

The report found that foreign ownership is most prevalent in new condo buildings in Toronto and Vancouver.

In Toronto about 10% of newer buildings (built after 2010), compared to 2% of those buildings built in the 1990s.

A similar trend was found in Vancouver, where 6% of units in newer buildings are believed to be foreign-owned.

Those stats are far from perfect – but they may be the best the industry currently has.

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  • by www.menno.ca 2016-05-02 11:29:15 AM

    Oh those horrible foreign buyers. I wish they'd just send their money, expect nothing in return and then just disappear altogether. Wouldn't that be a perfect solution? In the meanwhile, Canadians should, of course, be permitted to purchase property elsewhere without any restrictions.

  • by not buying it 2016-05-02 12:01:05 PM

    It's not a matter of holding back financing. Everyone knows they have cash. It's restricting their ability to buy unlimited numbers of properties. There are foreign purchasing restrictions almost everywhere in the world. Why not Canada? Because the politicians and their buddies don't want to stop the flow of money into their greedy little pockets.

  • by MFenn 2016-05-02 12:13:57 PM

    Oh, so yet more nostalgia for a "clampdown on foreign investment"?

    It would turn the clock back over 50 years to the failed 'foreign investment review' process which manifestly did not work, as promoted by the hapless Walter Gordon, and his sponsor Lester Pearson. Historian Michael Bliss has about Gordon, a nice man and truly disastrous at the financial helm, "bypassed his senior officials to bring in outside consultants (most notably a thirty per cent takeover tax on sales of Canadian companies to outsiders), disregarded clear warnings that his schemes were unworkable, learned from an enraged business community that there really were unworkable, and then bungled their withdrawal. In a few days this deeply foolish finance minister destroyed his own reputation and crippled the government's. .. Pearson's real mistake was in not having accepted Gordon's resignation. Gordon's further mistake was in not having insisted on resigning." Michael Bliss, 'Right Honourable Men', Toronto, ON: HarperCollins, 2004, p. p. 225-226.

    As someone said on another thread, why would my neighbour sell me a house at less that the market rate, just because I was supposedly more "authentically" Canadian than a supposed, foreign "bogeyperson"?

    And why contemplate officially starting to portray seniors who have spent a lifetime putting effort and taxes into Canada, as somehow a threat to Canadianism if they spend 4 or 5 or 6 months in the South, by introducing residence criteria for house purchases?

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