Toronto may be popular with foreign buyers, but probably not as popular as you think. Thanks to the Ontario Ministry of Finance (MoF), we’ve received a regional update on where exactly foreign buyers are flocking in the Greater Golden Horseshoe Region (GGHR). Between April 24, and May 26, Toronto topped the number of sales, but a suburb had a much higher ratio of foreign buyers compared to locals. Breaking it down region by region gives us a much better idea of what kind of pressure it is contributing to prices.
Foreign Buyers As A Percentage of Local Sales
The regions in Ontario with the highest density of foreign buyer’s as a percentage from sale were York, Toronto, and Peel. York, the region directly North of Toronto, had 180 sales to foreign buyers, which represented 9.1% of total sales. Toronto logged 429 sales to foreign buyers, which was 7.2% of all sales. In third was Peel region with 70 foreign sales, which was 3.8% of all sales in the region.
Source: Ontario Ministry of Finance, LRO.
Foreign Buyer Distribution Across The GTA
Top distribution of foreign buyers had the same three regions, just in a slightly different order. Toronto represented 50.1% of all foreign sales. In distant second was York region, which represented 21% of sales. Third was Peel, where they scored 8.2% of the sales. As you might expect, foreign buyers are concentrated in dense regions of the province.
Source: Ontario Ministry of Finance, LRO.
Some Regions Were Too Small To Count
One surprising thing is some suburbs that were blaming foreign buyers for rising prices had virtually no foreign buyers. The regions of Brant, Dufferin, Haldimand, Northumberland, Peterborough, and Victoria were combined in the provincial count, because they only had four sales to foreign buyers. Not four sales each, four sales was the total foreign transactions across these combined regions. So the 20%+ rise in prices had little to do with foreign buyers, and everything to do with the way they’ve been buying homes.
The province previously released a stat that said 4.7% of sales were by foreign buyers in the Greater Golden Horseshoe Region. That may be true, but that number dilutes the real number since it includes a lot of places where foreign buyers are probably not even considering. While 7.2% isn’t all that high, it is almost twice the size the government previously implied.
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It could be argued that the 7% foreign buyers in TO inflate prices by more than 7%. The number is not insignificant.
These numbers, 9.1%, should be taken as a minimum. Remember that these numbers represent foreign buyers that are identified and known by the ministry. However, they do not include relatives, family, friends, etc that are being provided funds by foreign buyers to purchase local real estate. As well, it would be an eye opener to see these numbers for just detached homes in the GTA and not for all real estate. (condos, etc) Our Real estate office and the agents we work with are laughing at this 9.1% number. In many areas in the GTA foreign buyers, or rather foreign money, represent over 75% of all buyers. Canadian families simply cannot afford some of the real estate being sold. In North York, Thornhill, Richmond Hill area for instance, a basic detached home is now between 1.5m and 2.5m.. Some of them tear down homes. The majority of buyers that are buying these homes are foreign buyers. Bottom line is they are parking their money in Canada because money invested in Canadian real estate is far safer than placing their money in their home country. The 3 geographies of buyers we see most (atleast 90% of buyers) are Asian buyers, Persian and Russian. The 15% tax will not stop the flow of purchases all that much. Only a Real Estate crash will or a much higher buyers tax. We very rarely have local Canadian buyers. So this 9.1% number that the government is promoting maybe real in terms of known foreign money, but it is certainly not the reality, not by a long shot and your site, the media and others who are writing about this industry should realize that the true number are much higher, especially for detached homes.
Agreed. Real estate agents in my area tell
Me that 75% of all people coming through open houses appear to be foreign buyers and many of these homes are then leased out or sit empty . 15% is not much of a deterrent
Our dollar is almost 80 cents now. That is about a 10% rise since Spring. On top of the 15% tax it is becoming more cumbersome to buy in the GTA.
I work as a regulator. These numbers are low. Electronic Fund transfer information from FinTrac suggests it is 50% in York Region and in excess of 30% in Toronto Proper. However rest assured that the 15% tax is just the start. Regulation is always behind and it often over reaches. Many of these properties will be released back into the market as funding to maintain the assets are cut-off. It is wrong to state that government is asleep at the wheel. I’ll leave it at that.
The most ridiculous thing about all this is how everyone is calling a 5% to 9% ration of foreign buyers “insignificant”… it looks like a lot of people need to go back to Economics 101 and learn about elasticity of supply and demand.
For months, we had been hearing that there simply wasn’t enough supply of homes in the GTA and that’s why prices were rising so rapidly… putting this in economic terms, the supply curve is ineleastic.
All other things being equal, when supply is inelastic an “insignificant” increase in demand, will lead to unproportionally large increases in price… so there’s nothing “insignificant” about foreign buyer participation in the GTA.
And that’s on top of the fact that these numbers are being recorded after the Ontario Fair Housing Plan was announced which significantly reduced that participation rate.
Yep, and they could be distorting prices in a very significant manner. If these are the numbers after the tax, I say increase it to 30%. I wouldn’t want foreign buyers representing more than 3% of all purchases in ANY region.
And the OREA always reports the number that benefits their agenda, such as including many of the less populous areas of the GTA to get the overall number down to 4.7%.
I’m sure in the desirable areas of Toronto (Downtown, Midtown, North York Centre) the % is much higher than 7%, probably closer to 20%. The same would hold true for the major centers in York region. The price inflation in the major centers forces buyers into alternate locations, so the price increases end up propagating throughout the region.
based on the research was completed in usa back in 2000, they found that every 1% increase non local buyers contrubited 1.9% on the price growth. Google it if u dont believe..