Canadian real estate has long been a safe place for global investors to park cash. Low scrutiny, few barriers, and little to no data collection on ownership, made it ideal. Statistics Canada (Stat Can) non-resident owner data from the Canadian Housing Statistics Program (CHSP) shows just how popular it was in 2020. The program, mostly an update with Manitoba added, shows extensive investment. Non-residents flocked to new construction (post-2016), buying up to 1 in 8 homes in some regions.
Is Non-Resident Ownership of Housing Good? It Depends
There is nothing inherently wrong with non-resident ownership of housing. Traditionally, markets consider it good news. If you live in a great region, other people find out and want to be there too. That drives prices higher, adding further interest — especially the investor class. Most people want to live in a region that’s attractive to other people.
Having an influx of money is generally a good thing, with a few exceptions. Regions strapped for cash get tax revenues and opportunities they lacked before. Seasonal tourism for some regions drives whole cities. Introducing money often brings opportunity, but it has its limits.
Regions with tight housing vacancies would notice it the most. More demand means more pressure on supply, and non-resident owners compete for supply. A healthy vacancy rate is considered 2-3% of a market’s housing. Even a 1 point increase of excessive non-resident buying can cut inventory by 30-50%. More pressure on housing stock can turn a healthy market into a crisis. It can also drive shelter costs significantly higher than income growth. That shifts productive labor capital to non-productive shelter investment, slowing a local economy.
Many places in Canada also have artificially low tax rates. They support these rates with supplemental funding from provincial and federal cash. Since non-resident investors pay their tax liabilities abroad, it is just a subsidy. Sweet deal for non-resident investors, who get a subsidy for investing in housing. However, it sucks to be someone in Calgary helping to subsidize Vancouver investors.
Once again, by itself non-resident investment is neither good nor bad. Locals just need to be aware of what’s driving the investment and whether it has a net benefit. If the uber rich just want to have a summer home in Vancouver, that’s one thing. These folks are happy to pay the non-resident tax apparently, almost like a membership fee to a club. That’s arguably a solid windfall for a city.
If these are just investors exploiting low tax rates, opaque ownership, investor returns, etc. — it’s another issue. A boost to non-productive wealth is a sweet deal to a point, but not necessarily a net benefit. Pursuing excessively exploitative policy, whether enabling domestic or non-resident investors, often causes long-term damage that outweighs short-term gains. That said, let’s see the extent of the issue across Canada.
Ontario Surges, Non-Residents Bought 1 in 14 New Homes In Toronto
The stats confirm Ontario real estate is world-renowned attracting global investment capital. Non-residents owned 3.4% of the province’s housing stock in 2020, and 5.6% of recent construction (built after 2016). It’s hard to argue demand rising by 1.2 points since 2018 didn’t create more market pressure. Though we’re sure someone is writing an op-ed to argue eliminating a point of productive stock has no influence on price.
Predictably, Greater Toronto (Toronto CMA) leads for non-resident ownership in Ontario. Non-residents owned 4% of housing stock in 2020, and 7.4% of recent construction. New construction ownership saw the share increase 1.3 points since 2018. Since the province stopped providing non-resident tax updates, there’s no way to tell if the tax is ineffective or no one needs to pay it. Our previous requests for data found no one is quite sure who has the data, apparently.
Ontario Real Estate Markets Have Seen Non-Residents Buy Up To 1 In 14 New Homes
The share of housing stock with non-resident ownership in Ontario. Shown as a percent of total housing stock in 2020 and the share of new construction built after 2016.
Source: Statistics Canada; Better Dwelling.
Non-resident buying of new construction in Ontario’s small cities was noteworthy. Kenora (7.1%), Kitchener-Cambridge (5.8%), and Woodstock (5.4%) were just behind Toronto. These are also regions that saw some of the fastest home price growth in Canada. Since Canada led the world, these markets were amongst the fastest growing in the world. Probably just a bunch of tiny Manhattans in the middle of farmland popping up.
BC Real Estate Has Seen Non-Residents Buy 1 In 11 New Homes, 1 In 8 New Homes In Vancouver
British Columbia (BC) real estate has always been a non-resident investor status symbol. The CEO of Blackrock even told investors it was one of the best stores of wealth in 2015, similar to art. No surprise that non-residents owned 4.7% of housing stock in 2020, and 9% of recent builds. About 1 in 11 new builds were acquired by non-resident households, which is a LOT.
Imagine if every home built post-2016 was a condo with 6-units per floor. That would be an average of 1 non-resident investor per two floors in every newly built building. That’s a lot of non-resident investors, but it appears the non-resident tax is working. In 2020, the share of non-resident owners of recent construction fell by 1.5 points.
The top spot in BC for non-resident ownership is Vancouver CMA, which makes the most sense. Non-residents owned 6.2% of the region’s housing supply in 2020, and 1 in 8 (11.9%) of recently built homes since 2016. It ranked the highest of any city in Canada for non-resident ownership for both measures. World. Class.
BC Real Estate Markets Have Seen Non-Residents Buy Up To 1 In 8 New Homes
The share of housing stock with non-resident ownership in BC. Shown as a percent of total housing stock in 2020 and the share of new construction built after 2016.
Source: Statistics Canada; Better Dwelling.
A curiosity you might find interesting, the next region on the list is Dawson Creek. The region saw 9.1% of recently built homes bought by non-resident investors as of 2020. It’s not known as the next Manhattan or even a tourist spot, but whatever floats your boat.
Nova Scotia Real Estate Has The Highest Share of Non-Resident Owners
Nova Scotia real estate has long been a discreet hotspot of foreign capital. Even Fox News personality Tucker Carlson owned an island in Nova Scotia until 2017. He ended up selling it to Gerald Cotten, which is a whole other story to dive into another day.
Consequently, it isn’t a total surprise it leads the provinces for non-resident ownership. Non-residents owed 5.6% of housing stock in 2020, and 7.4% of recent builds. New homes in rural areas are the biggest attraction, with 8.6% going to non-residents. Halifax is second with 1 in 14 (7.2%) newly constructed homes owned by non-residents.
Atlantic Canadian Provinces Lead For Non-Resident Ownership of Real Estate
The share of housing stock with non-resident ownership in Atlantic Canada. Shown as a percent of total housing stock in 2020 and the share of new construction built after 2016.
Source: Statistics Canada; Better Dwelling.
New Brunswick Saw Non-Residents Buy 1 In 18 Homes
New Brunswick real estate non-resident buyers are really into the province’s older homes, a bit of an odd trend. Non-residents owned 5.6% of the province’s housing supply in 2020, the same rate as Nova Scotia. One key difference is new construction is underrepresented at 5.0% of recent builds. It’s still a huge amount — a greater share of ownership than Toronto. Just interesting since new construction has stronger non-resident marketing teams, often being sold in bulk.
Even people from New Brunswick are likely to be shocked, but small towns lead for demand. Non-residents owned the largest share of new construction in Edmundston (11.1%) and Bathurst (7.3%). More prominent markets like Saint John (4.1%), and Fredericton (3.7%) still had a large share. It just doesn’t look as extreme in contrast.
Manitoba Real Estate Is Attractive to Non-Residents, Just Not Relative To Other Markets
The biggest update in the Stat Can CHSP, was the addition of Manitoba’s land registry. Non-residents owned 2.7% of the province’s housing stock in 2020 and 2.5% of recently built units. The province has been one of the few markets that didn’t see a real estate boom after the 2020 rate cuts as well.
Brandon led for non-resident investors at 1.9% of housing in 2020, and 3.1% of recent construction. Winnipeg is slightly behind with 2.6% of the region’s supply, and 2.8% of new builds. These numbers might sound low, but keep in mind that a 2-3% rental vacancy is a healthy amount of inventory. Having a point of housing moved to investors is considerable market pressure.
Manitoba Non-Resident Ownership of Real Estate
The share of housing stock with non-resident ownership in Manitoba. Shown as a percent of total housing stock in 2020 and the share of new construction built after 2016.
Source: Statistics Canada; Better Dwelling.
Newfoundland Real Estate Markets Have Seen Non-Resident Buyers Scoop Up To 1 In 10 New Homes
Newfoundland real estate is some of the most sought after for investors. Unfortunately Stat Can didn’t have access to non-resident ownership information for the province. However, they did break down ownership in some of the province’s major cities.
St. John’s led with 5.6% of total housing stock in 2020, and 9.8% of recent construction. That means 1 in 10 new homes delivered since 2016 are owned by non-residents. It’s a substantial non-resident demand considering the City is experiencing a rental crisis. Maybe they won’t notice.
Once again, non-resident homeownership isn’t necessarily bad, but it is a market pressure. It used to only impact global cities like New York City and London, but it’s spreading everywhere. Local policymakers likely don’t know what cheap global money and easy capital flows mean. However, they’re about to undergo a baptism-by-fire on global market pressures.
The world’s uber rich just wants to live like fisherman in regions without consistent work and no economy. They’re going to move in soon, they just don’t have time. One day!
and they started wanting it right after China promised to execute people caught committing graft. Funny how that works.
Wow …!
You nailed it..!
By referring your March -2022 you slapped to those who were misleading some half-literate realtor, (who also played a vital role in giving a pressure to first-time homebuyer) by showing a fear, that “you want catch-up in future, if you will not buy right now”.
It was not a real shortfall of inventory. The situation was dramatically created (since, after 2014) to make real estate market a money making field and Covid-19 with stimulus money pushed it with a jet speed.
Some builders have taken advantage of these situation as well.
but the “experts” said this is fear mongering, there’s no way the foreign capital can influence home prices. He also has no idea how two of China’s top money lobbyists bought his house for twice the assessed value.
https://www.scmp.com/news/world/united-states-canada/article/2181447/professor-says-vancouvers-china-money-fears-mirror
Canada is either an attractive place where foreign capital wants to live and it contributes to higher prices, or a place where foreign money isn’t a problem and it’s overpriced. I don’t understand how anyone argues it’s a place where foreign capital wants to be but it doesn’t influence demand.
People think building more is the solution but don’t realize more land, more materials, more labor, etc. mean higher home prices.
both those new single-family homes sold in Toronto now that foreign buying is going to be banned shows plenty of inflows coming. The money won’t stop!
Just keep in mind that politicians are trying desperately at every level to get an exemption for their region because they can’t let this party stop.
High foreign demand is why Toronto real estate can only go up. There’s no falling when everyone in the world wants to live here.
They don’t want to live here, the want to either launder their money here, or to hide it here.
The government can control how much of a business a foreign entity can own, but we don’t seem to have any controls when it comes to homes (one of our most cherished assets).
Since non-resident investors pay their tax liabilities abroad, pretty much says sit all. If you don’t pay your income taxes in Canada, buyers should pay a surtax of 50% to 60% higher than normal property taxes every year. If they don’t like these rules, they can leave and open the market up to hardworking and legitimate Canadian taxpayers.
This would mean that each Province needs to have a Landownership Transparency registry otherwise, foreign investors will use nominee owners, which is probably the case today. Therefore, 1 in 8 homes sold in Vancouver to foreign investors is an incorrect number. Don’t expect Banks, Realtors, lawyers or notaries to disclose the names of the real owners – everyone’s hand is in the cookie jar.