Foreign buyers aren’t the ones driving Canada’s soaring housing prices after all, it seems, with foreign ownership in condominium apartments only accounting for a small fraction in top markets, according to a government report released Wednesday.
"Foreign ownership is just one factor influencing Canada’s housing markets, but it’s an important one that continues to gain attention," said Bob Dugan, chief economist of the housing agency Canada Mortgage and Housing Corporation (CMHC) in a statement.
Foreign buyers have been under stricter scrutiny in Canada amid a public outcry that wealthy overseas buyers are pushing up prices, making housing unaffordable for locals. In early August, the provincial government of British Columbia began imposing an additional 15% property transfer tax on foreign home buyers in Vancouver.
More:With New 15% Foreign Buyer Tax, Vancouver Sales Cool
The new tax might have dampened demand from overseas, especially in the condo market. Foreign ownership in condos in the western coastal city dropped to 2.2% from last year’s 3.5%, according to the CMHC report.
However, other major Canadian cities without a tax didn’t see foreign ownership increase either. Around 2.3% of condos in Toronto were owned by foreigners in 2016, as opposed to 3.3% a year earlier. Meanwhile, foreign ownership in Montreal dropped to 1.1% from 1.3% in 2015, the survey found.
This year’s shares in both Vancouver and Toronto were more in line with those in 2014, said the report. The relatively higher shares observed in 2015 were due to an unusually high proportion of foreign ownership in newly constructed condominiums that year relative to 2014 and 2016.
More:Toronto Luxury Home Sales Outpace Vancouver
Foreign Ownership Concentrated in New Developments
The CMHC report found foreign ownership was highest in buildings completed since 2010.
"The share of foreign ownership remains low and concentrated in newer, larger buildings located in the cores of major cities like Vancouver, Toronto and Montreal. We continue to work with our partners in finding new ways to bring this important story into sharper focus," said Mr. Dugan.
While roughly half of the condo units owned by foreigners in Toronto were in newer buildings, foreign ownership of new condos was just 3.9% in 2016. In Vancouver, foreign ownership in newer buildings was 5%, the report said.
More:Vancouver Announces Empty-Home Tax to Take Pressure Off Rental Market
Write to Fang Block at fang.block@dowjones.com