Foreign money “distorting” the country’s biggest housing markets is bad for Canada, RBC’s CEO warned Tuesday.
Bloomberg Canada reported that at an RBC-hosted conference in New York March 6, David McKay said, “We do not need foreign capital using Canadian real estate as a piggy bank. If capital is coming in to sit in a home, unproductively, and is distorting your marketplace and the livelihood of your residents — no thank you.”
McKay said he agrees with demand-side taxes and other measures targeting foreign buyers, as well as other recent changes introduced to cool the housing market, such as the new mortgage stress test. He added that these are starting to affect the market, and that he’s seeing “a little bit more healthy dynamics.”
“Demand is down and house prices have been stable,” McKay said. “There’s still intensive bidding, but to a lesser degree.”
Metro Vancouver has seen home sales slow in the past two months, particularly in the detached home sector, and price growth has been slowing, although continues to rise. Toronto has seen steeper annual declines in home sales over January and February.
Foreign money is adding “gasoline” to Vancouver and Toronto housing markets, McKay said. But he also said there was a “cocktail of factors” that led to soaring home prices, including rising population, land constraints, lack of housing supply and low interest rates.
His comments come a few days after Statistics Canada issued a quarterly report that found real estate and related industries made up one-fifth of Canada's GDP in 2017.