12 February 2018 0 Comments Posted By : Murtaza Haider and Stephen Moranis

Dividing the real estate market into ‘us and them’ would be a costly mistake for our economy

When it comes to housing, it’s not just about us and them.

Many believe that the recent rise in housing prices in Canada was fuelled, to a large extent, by foreign homebuyers (them) and not by Canadian residents (us). However, such divisive binaries do not explain all the forces at play.

A recent analysis of mortgage issuance by the CMHC revealed that the participants in housing markets in Canada involve not just us and them, but also two additional cross-over cohorts.

In addition to permanent residents, the CMHC broke out data for non-resident owners (NROs), a broader category than just foreign buyers which also includes Canadian nationals who have settled abroad, and non-permanent residents (NPRs), which comprises international students and temporary workers who live in Canada and thus contribute to our economy and society.

A breakdown of NPRs revealed that in 2015 almost 52 per cent were students and 46 per cent were temporary workers, with the number of the former having doubled to 353,355 between 2006 and 2015.

NPRs are increasingly responsible for population growth in urban Canada. From 2004 to 2015, NPRs accounted for 20 per cent of the population growth in Vancouver and 11 per cent in Edmonton. Their contribution to population growth in Montreal and Toronto was slightly lower at 8.5 per cent.

The NPR contribution to population growth is even more pronounced among younger cohorts. For the period 2004-2015, NPRs accounted for 46 per cent of the growth in the 18-44-year-old demographic in Vancouver. Their share in the growth of younger cohorts stood at 42 per cent in Montreal and 28 per cent in Toronto.

With such a profound influence on the demographic makeup of large cities, NPRs are bound to have an impact on urban housing markets, and were the focus of a recent CMHC report on the influence of foreign funds in Canadian housing markets.

According to the report, the NPR share of mortgages issued in large urban housing markets has been increasing over the past ten years.

Nearly 4 per cent of the mortgages issued in 2016 in Vancouver were held by NPRs, which was significantly higher than the share of mortgages held by non-resident owners (2.6 per cent). NPRs accounted for approximately 3 per cent of the mortgages issued in Edmonton in 2016 and 2.7 per cent in Toronto.
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