Investors own a big chunk of Canada’s housing market

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Investors own 20% of homes in Canada and a whopping 40% of condos

At least 20 percent of residential property was owned by investors in each of the five provinces surveyed as of early 2020. At least 20 percent of residential property was owned by investors in each of the five provinces surveyed as of early 2020. Photo by Mark van Manen/Postmedia

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Statistics Canada’s new dataset, which tracks investor ownership of residential property, offers additional insight into the country’s housing market, but what that means for policymakers may be more difficult to determine.

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Data first released by the Canadian Housing Statistics Program (CHSP) on February 3 showed that as of early 2020, at least 20 percent of residential property was owned by investors in each of the five provinces surveyed.

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The proportion of investors ranged from 20.2 percent in Ontario to 31.5 percent in Nova Scotia. In Ontario, 41.9 percent of condos were owned as investments, the highest rate nationwide.

While some critics argue that investors are crowding out families and driving up prices, other market watchers say investment is crucial to speed up much-needed construction work given the country’s acute housing shortage.

“There are two possibilities, but we don’t comment on whether it’s good or bad,” Statistics Canada’s Joanie Fontaine said in an interview. “It helps on the one hand and can harm them on the other.”

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Fontaine and his colleague Joshua Gordon, who co-authored the report, said investors renting out their properties are helping to increase the “really low” supply of rental housing, but removing units for potential buyers who intend to take them use as a primary residence.

Jordon Scrinko, chief executive and co-founder of Precondo.ca, an online catalog of pre-construction units in the greater Toronto area, said having investors in the pre-build is especially important.

Purpose built rental housing in Toronto is back in vogue after a long period of shortage, he said, adding that the increase in recent years is “good to see”.

“If[investors]didn’t buy the pre-construction condos, then the developers wouldn’t meet the sales thresholds required by the bank to actually secure the mortgage lending and thus not build any new housing supply at all,” Scrinko said.

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In an interview with the Financial Post in January, Bob Dugan, chief economist at Canada Mortgage and Housing Corporation (CMHC), also highlighted the importance of investment, noting that trying to improve housing affordability through measures like rent control could backfire by lowering returns and deterring investors.

“We have to think about it very carefully because we need the investment to increase supply,” Dugan said.

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Robert Hogue, deputy chief economist at RBC Economics, said while the new data could help policymakers gauge Canada’s housing market, it wasn’t enough to say whether the proportion of investors among homeowners is “too high” or “not enough” is further information.

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Over time, as Statistics Canada continues to document and quantify this data, Canadians could compare whether different areas with a higher rate of investors are having an impact on home prices and costs, including rent, he said.

“What we’ve gotten is a first set of very important data that we’re going to use for years to come,” Hogue added, also noting that it’s already lagging the market.

“The Bank of Canada not long ago showed some numbers (suggesting) that new investors were taking an increasing share of the sales, so I assume that’s likely to have increased since then,” Hogue said, although he noted that it’s harder to say for the more recent periods because rate hikes in recent months have driven away not only investors but also first-time home buyers.

“It’s unclear what that proportion will be in the future,” he said.

The five provinces studied by StatsCan were British Columbia, Manitoba, Ontario, New Brunswick and Nova Scotia. The agency hopes to add the remaining provinces soon.

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