In the eyes of foreign buyers, Toronto is North America’s New Dubai – But are they behind our city’s short housing supply?
News from the CMHC on gathering data surrounding foreign real estate investors in Canada has many local buyers worried that they’re responsible for driving housing prices up. Recently, China’s Government made changes to the Qualified Domestic Institutional Investor (QDII2) program which allows individuals in China, whose net assets exceed 1 million Chinese Yuan or approximately $210,000 CAD, to invest overseas. It is estimated that combined, these individuals have up to $2.3 trillion that can now be invested globally. Despite these changes, the majority of real estate demand still comes from local investors. Toronto is home to top educational institutions, cultural diversity and a thriving economy, and is also the country’s financial hub. In addition to low interest rates, these factors play a large role in the number of Canadians migrating to the GTA as well.
Our low loonie has drawn the interest of foreigners who are able to stretch their dollars further than they can in their own country. While there has been an increase individuals from India, China and even the U.S. entering Toronto’s condo market, Canadians shouldn’t feel discouraged — There is still plenty of room for GTA real estate investors. With the average lease for one bedroom condo unit fetching $1,642 per month, earning back your investment through rental income, while the avoiding the hefty condo fees and financial risk that larger units bring is possible. Keep in mind that renters of one bedrooms are comprised mainly of young professionals, so units in the downtown core are looked upon more favourably. Furthermore, families who have given up on buying a house in Toronto are turning to condos as well – making two bedroom condo units a wise investment. Two bedroom units also appreciate in value considerably faster than one bedroom units, allowing you to see a return on your investment should you sell the unit in the future.
When looking at the larger picture, you have to consider the net number of foreign buyers and immigrants, and the net number of Canadians moving to Toronto from other cities. Also, once the CMHC addresses data surrounding the volume of mortgages issued and outstanding, characteristics of borrowers, property type and geographic location, we will be able to more accurately gauge the of number of Foreign Real Estate investors Toronto brings, as well as domestic investor levels. Despite rumours of a housing bubble, Toronto’s housing market remains a well-oiled machine and shows no signs of slowing down.