Foreign buyer activity on the rise in Montreal
By Lucas on Jun 23, 2017
Before the foreign buyer tax was even implemented in Ontario, some overseas investors started looking elsewhere for good opportunities. According to the Canada Mortgage and Housing Corporation (CMHC), Montreal is showing signs of being the next hot spot for foreign investment.
The results of CMHC’s latest Housing Market Insight report show that foreign ownership in Montreal saw strong growth in 2016 and remained steady from January to April 2017. While foreign buyer activity has increased significantly, it’s still low overall.
In the first four months of 2017, there were 235 recorded foreign transactions recorded in Montreal, which is a 40% increase compared to the same period last year. There really is no reason to doubt whether or not the foreign buyer tax in British Columbia and Ontario played a role in this increase in activity.
So, which foreign investors are focusing in on Montreal? Chinese investors now account for 17% of all foreign residential investment. Last year, less than 10% was from China.
40% of the Chinese investors purchased single detached homes, compared to 28% of US investors and 17% from France. When it comes to location, Chinese investors prefer the municipalities of the Island of Montreal surrounding the city.
In May 2017, Montreal home sales were up 15%, hitting a record of 5,057 transactions, mostly in the hot condo market. When these numbers came out a few weeks ago, pundits speculated whether Ontario’s foreign buyer tax had something to do with the increase.
Given the figures, we’re not ready to say that the foreign buyer tax had much to do with Montreal’s rise in overall home sales. Yes, foreign activity went up 40% year-over-year, but it still only accounted for 235 transactions out of more than 5,000.
“Although the number of foreign buyers has continued to increase in the Montréal area since the beginning of 2017, purchases by foreign buyers represent only about 2% of all transactions in the residential market,” says Francis Cortellino, Principal Market Analyst, CMHC.
We think the Montreal real estate market needs to be watched for a few more months, maybe until the end of 2017, before any conclusions can be made about foreign buyer activity.
