Supply, not foreigners, behind high Canada house prices: CMHC

Wed Nov 30, 2016 4:45pm EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Nicole Mordant

VANCOUVER (Reuters) - A Canadian housing shortage, not a rush of foreign demand, is probably driving up property prices, the country's housing agency chief said on Wednesday, as he warned against blaming overseas buyers for the decade-long market boom.

New government data shows foreign ownership is only a small factor behind the high prices, Canada Mortgage and Housing Corp Chief Executive Evan Siddall said in a speech at the Greater Vancouver Chamber of Commerce.

Foreigners have been blamed for driving up prices, particularly in Vancouver, Canada's most expensive housing market, where locals believe wealthy Chinese buyers have made housing unaffordable for ordinary Canadians.

The housing agency said in a report on Wednesday that foreign ownership of Canadian condominiums dropped in 2016 after the introduction of a foreign buyers tax in Vancouver, and remains a fraction of overall ownership concentrated mostly in newer buildings.

The share of foreign ownership fell to 2.2 percent in Vancouver in 2016 from 3.5 percent in 2015, the agency said, suggesting that the August introduction of a 15 percent tax on foreign buyers in that city had dampened demand.

Buyers did not appear to have shifted to other cities where the tax was not imposed, as some analysts had predicted, with foreign ownership falling to 2.3 percent in Toronto from 3.3 percent a year earlier.

Siddall said the most important factor driving up home prices was a supply shortage, particularly in Vancouver, along with rising disposable incomes, immigration and lower mortgage rates.

"We cannot allow (housing) to become a wedge that divides us, separating neighbors and communities, and creating tensions between newcomers and those that have been here longer," Siddall said.   Continued...

 
Construction workers chat on a condominium building site in Toronto, Ontario, Canada October 3, 2016. REUTERS/Chris Helgren