CPABC Industry Update Summer 2015 - BC Real Estate Industry | Page 22

Who’s Driving the Market... (cont’d)
that estimates of foreign ownership
tend to cluster around 5 per cent. We
have been unable to find any outliers
of data to suggest the impact is more
pronounced.

Canadian Data
In the Metro Vancouver context,
data relevant to measuring foreign
investment does exist from the 2011
Canadian Census, the Canada Mortgage
and Housing Corporation (CMHC),
Urban Futures and REBGV. While none of
these measures are perfectly designed,
they were independently produced
and converge around a similar central
tendency in regard to foreign ownership
in the Vancouver housing market.
The classification of a foreign-owned
versus a vacant unit is somewhat
fluid in Census data. Statistics Canada
recommends grouping together the
share of private dwellings that were
either unoccupied or occupied by
foreign or temporary residents on
Census day.
Census data tells us the proportion
of housing occupied by foreign/
temporar y residents in Metro
Vancouver was 0.78 per cent in 2011.
This is below the 1.40 per cent average
of the largest Canadian urban centres
and less than the provincial proportion
of 1.01 per cent. In addition, the share
of unoccupied dwellings in Metro
Vancouver was 5.35 per cent compared
to an average of 6.45 per cent across
the same urban centres.
The 2011 Census data is fur ther
suppor ted by data from CMHC ’s
rental market survey in which CMHC
asked property managers to provide
information on condominium
apar tment units owned by nonCanadian residents. As of the end of
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2014, the share of foreign ownership
in the Vancouver CMA condo market
was estimated at 2.3 per cent. This
compares to 2.4 per cent for Toronto,
1.1 per cent for Victoria and 1.5 per
cent for Montreal.
In addition, private sector groups
have attempted to measure the
share of foreign ownership in the
market. In 2010, consultants at Urban
Futures, using BC Assessment data,
analyzed the mailing addresses of tax
assessment notices and found just
0.4 per cent of tax notices were sent
outside of Canada.
An informal monthly poll conducted
by REBGV of about 200 REALTORS®
shows that home sales to foreign
investors have gradually trended
higher, from 2.6 per cent of residential
transactions in 2009 to 3.6 per cent
this year, and have averaged 3.2 per
cent over that period. For perspective,
local/domestic investors averaged
12 per cent of transactions over the
same period. The general lack of capital
appreciation in the apartment market
has led to a slight downward trend in
the share of transactions by domestic
investors, with speculative activity
likely near decade lows. According
to CMHC, about 50,000 apartment
condominiums were actively in the
rental stock in 2014.

International Data
While Canada does not formally track
foreign ownership in the residential
real estate markets on a monthly or
annual basis, other jurisdictions do.
In the United States, international
buyers are surveyed by the National
Association of REALTORS® (NAR) and
Australia directly measures foreign
investment via its Foreign Investment
Review Board.

I N D U S T R Y U P D AT E

The foreign investment trends in these
two jurisdictions can be informative
for BC, given their similar proximity to
Asian markets. According to a 2014
NAR sur vey, international buyers
contributed to 7 per cent of total US
home sales. Of that total, Chinese
buyers accounted for 24 per cent of
international sales, and about 5 per
cent of total California home sales,
which were mostly split between San
Francisco and Los Angeles.
In Australia, official data shows that
for the past decade, approvals for
foreign investment in the residential
sector have remained between 5
and 10 per cent of dollar volume and
roughly half of that number for total
unit sales. Perhaps most importantly,
according to research conducted by
the Reserve Bank of Australia, rather
than competing with first-time
home buyers, foreign investment
is concentrated in higher-priced
market segments. Moreover, foreign
investment largely occurs in the highdensity areas of major cities such as
Sydney and Melbourne, and is not
for short-term speculative purposes.
They also note that foreign investment
creates a supply response that
stimulates new home construction,
generates employment, increases
economic output and provides a larger
tax base.
Cameron Muir is the chief
economist for the BC Real Estate
Association.
Brendon Ogmundson is an
economist with the BC Real Estate
Association.
This abridged report is published
with the permission of the BC Real
Estate Association.