(Corrects price from billion to million in paragraph 8-9)
OTTAWA, Feb 6 (Reuters) - The share of Canadian mortgages held by foreigners has risen in the last two years, particularly in Vancouver and Toronto, and young home buyers among them appear to be getting financial help from their parents, the federal housing agency said on Tuesday.
Nearly 10 percent of mortgages issued in Canada’s two hottest housing markets in 2016 went to non-permanent residents under the age of 25, the Canada Mortgage and Housing Agency (CMHC) said “signifying some younger NPR (non-permanent residents) may be receiving parental support to purchase homes.”
A backlash against foreign investors, particularly those from mainland China, has spurred provincial governments to impose a foreign buyers tax in Vancouver in 2016 and in Toronto in 2017, despite data showing non-residents are a small part of the market.
The markets in both cities have cooled since double-digit price increases in early 2016 sparked fears of a bubble. Analysts are divided over whether the Canadian housing market will crash or re-inflate in the months to come.
The CMHC report on mortgage issuance by Canada’s five largest banks showed 3.9 percent of mortgages issued in Vancouver were held by non-permanent residents in 2016, up from 3.3 percent in 2014. In Toronto, 2.7 percent of mortgages issued in 2016 were held by foreigners, up from 2.1 percent in 2015 and 2.0 percent in 2014.
While the number is a tiny fraction of overall mortgage issuance, the rapid growth of foreigners aged 18 to 44 is shifting the home-buying demographic in Canada, the CMHC said.
“Among the small group of mortgage holders under the age of 25, non-permanent residents represented an even larger share in Vancouver and Toronto at nearly 10 percent of total mortgages issued in 2016,” the report noted.
Foreigners tended to buy more expensive properties, according to the report, with the average single detached home purchased by a non-permanent resident valued at C$1.09 million in Toronto and C$1.65 million in Vancouver.
That was above the average C$902,000 and C$1.42 million bought by permanent residents in those cities, respectively, the report showed.
Data released in December showed foreign buyers in Canada’s two largest housing markets are focused on larger and more expensive homes. (Reporting by Andrea Hopkins; Editing by Jeffrey Benkoe)