Foreign buyers of high-end homes in Canada are waiting for the pandemic to ease, but they’re coming for sure.
A report by Sotheby’s International Realty Canada notes an “upswing in the volume of international enquiries on luxury property listings in Toronto, Montreal and Vancouver in the preliminary months of 2021”.
These enquiries “reveal that underlying demand” by foreign buyers has “not dissipated”.
As Sotheby’s noted in its report, property purchases by international investors are “set to resurge in the seasons ahead”.
“Canadian real estate continues to be well-positioned as a destination for foreign investment and asset diversification for high and ultra-high net worth investors worldwide,” the realty company said in a report released Tuesday (March 30).
The report noted that restrictions on global travel limited international purchasers of Canadian real estate in 2020.
“Although the pandemic has seen international buyers purchasing luxury Canadian properties either entirely virtually, or in some cases, sight unseen, many are also awaiting the reopening of borders to enable tangible visits to view and buy properties,” Sotheby’s observed.
It continued: “The imminent release of this pent-up international demand is set to spur additional sales activity across the conventional and luxury markets in the country’s major metropolitan areas this spring.”
Canada remains an attractive place for foreign buyers of real estate because the country is an “international beacon representing stability, security and safety”.
“We are forecasting multiple waves of consumers in the coming months, both local and international, who have a desire for Canadian real estate ownership that has never been stronger,” Don Kottick, president and CEO of Sotheby’s, stated in a media release.
“Most importantly,” Kottick added, “these potential buyers have unprecedented access to cash and low-cost borrowing that will enable them to engage in the market in months to come.”
It may be recalled that the federal Liberal government of Prime Minister Justin Trudeau announced on November 30, 2020 that it plans to introduce a tax on “Canadian housing by foreign non-resident owners”.
“Too often,” the federal government stated in a budget document that talked about the tax, “the price of homes is out of reach for Canadians, in particular for those looking to buy their first home.”
Moreover, “Speculative demand from foreign, non-resident investors contributes to unaffordable housing prices for many Canadians.”
In order to “make the housing market more secure and affordable for Canadians”, the government will ensure that “foreign, non-resident owners, who simply use Canada as a place to passively store their wealth in housing, pay their fair share”.
In a report Tuesday (March 30), BMO Economics laid out potential measures to cool down the current white-hot property in Canada.
These measures include what bank economists Robert Kavcic and Benjamin Reitzes called as a “national non-resident buyers tax”.
The tax can be applied individuals who are not citizens or permanent residents of Canada or by foreign corporations.
“A national tax could simplify the policy (i.e., one uniform measure rather than a patchwork of regional rates), and potentially cool markets outside Toronto and Vancouver that are extremely strong,” Kavcic and Reitzes wrote.
In its March 30 report, Sotheby’s also noted that high demand for high-end properties in Canada from Canadian citizens living abroad.
The company stated that a count indicates a total of 2.8 million Canadian citizens based in other countries.
“Since the start of the pandemic, Sotheby’s International Realty Canada has noted a marked increase in luxury real estate purchases by such Canadians seeking a path to return, or a secondary residence to enjoy,” the report stated.