No doubt there are other factors at work, especially the availability of cheap money and the apparent willingness of many Canadians to take on enough debt to choke a horse. All the same, there do seem to be grounds for assuming that the CMHC's data are understating the influence of foreign buyers and, credit where it's due, many of the problems with the data have been picked up in the comments on the linked article.
- The data are based on self-reporting, which is intrinsically problematic. For example, how are dual passport holders classified?
- Given that the ownership of the overall housing stock changes hands only gradually, it would be more informative to know what proportion of sales were attributable to foreign buyers, rather than what proportion of the country's total housing stock they now own.
- CMHC's data appear to count a home as foreign owned only if the owner is not resident in it, yet it is well known that many Asian buyers have purchased properties for their offspring attending Canadian universities, often registering the properties in the child's name. Such properties should surely be counted among those foreign owned, but in the CMHC's methodology, they aren't.
Regardless of these problems with the numbers, it seems reasonable to conclude that the lion's share of the blame for high house prices should not be laid at the door of foreign buyers. That blame belongs with the central bank, as well as with lenders who have continued to dole out money even as warnings of building stress levels have become ever louder. The evident intention of the Bank of Canada to keep raising interest rates, coupled with new mortgage stress tests in the New Year, could make 2018 a much trickier year for the Canadian housing sector.
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