UPDATE 1-Bank of Canada says foreign buyers complicate housing market

Wed Mar 25, 2015 5:40pm EDT
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(New throughout, adds focus on foreign home buying, inflation, comments from deputy governor; adds byline)

By Nicole Mordant

KELOWNA, British Columbia, March 25 (Reuters) - A lack of data on foreign buyers scooping up property in Canada has made it tougher for the central bank to understand housing market and financial system risks, a senior bank of Canada official said on Wednesday.

Overseas home owners could respond more quickly to house price shocks, potentially exacerbating price moves, Deputy Governor Tim Lane said.

But he also noted any indebtedness they have would have less impact on the Canadian financial system assuming their money comes from abroad.

Foreign buying has helped pump up Canada's housing market, particularly in major centers like Toronto and Vancouver. But Lane noted it is hard to get data on how much foreign buying is taking place.

"It's hard to know to what extent we have Canadian households getting more heavily indebted to buy the new homes and to what extent we have foreign residents who are doing that," Lane said.

"If they're not borrowing from the Canadian financial system then it doesn't create the same immediate financial stability risk," he added.

Lane also told the Kelowna Chamber of Commerce the impact of low oil prices might drive growth "well below" 2 percent in the first half of the year.   Continued...