Following the introduction of foreign-homebuyer taxes in Toronto and Vancouver, reports and data have surfaced detailing the impact of these levies on their respective housing markets. But do these reports paint a complete and accurate picture?
According to the eighth edition of Fortress Real Developments’ The Market Manuscript, published last Wednesday, the answer is a resolute no.
“The data that’s being released is still only talking about foreign buyers, they’re not talking about how many resident and non-resident foreign buyers are buying,” Ben Myers, senior vice president of market research and analytics at Fortress Real Developments, told BuzzBuzzNews.
Myers, who authored the report, dives deep into what he considers to be the most important topics in the nation’s real estate, including Ontario’s Fair Housing Plan, in particular its 15% non-resident speculation tax for the Greater Golden Horseshoe region.
Similar to the foreign-buyer tax implemented in Greater Vancouver in August 2016, Ontario’s foreign-homebuyers’ tax was introduced in an effort to cool the region’s escalating house prices.
While both the British Columbia and Ontario governments have released data about the number of foreign buyers involved in sales before and after the levies were introduced, Myers said critical information is missing.
“It would be nice if they reported on how many are resident and non-residents and how many are students buying and how many foreign-buyer entities sold their units as well,” he said.
Myers believes there is an erroneous perception that all foreign real estate buyers are investors who use their property as vacation homes or keep it vacant.
This popular perception doesn’t align with survey results from the Toronto Real Estate Board (TREB), which found that 50% of foreign-purchased property is used as a primary residence and 20% is used for investment.
Many foreign buyers are purchasing real estate overseas for children who will study abroad. According to Juwai.com, a Chinese-language international property website, educational purposes accounted for 44% and 41% of Chinese inquiries for housing in Vancouver and Toronto respectively.
Analysts also tend to overlook previous foreign-buyer activity. “We always report on how many foreign buyers have bought units but we never report on how many foreign buyers have sold units, so what’s the net difference?” Myers said.
Knowing the net increase or decrease in foreign buyer activity will make a major difference in determining their impact, he added.
Myers concludes that the foreign-buyer tax was successful in cooling Vancouver’s housing market. However, with the city’s market once again picking up steam, it could be an indicator of how the housing market in the Greater Golden Horseshoe region will react to its own levy in the short-term.