British Columbia has seen a record number of new homes registered for construction in 2021, but data from the Bank of Canada suggests that a significant share of them are likely to be bought by investors.
The Bank of Canada study looked at mortgage and credit bureau data to determine the percentage of homes in the country purchased by first-time homebuyers, repeat buyers and investors.
She concluded that investors and repeat buyers are making up an increasingly large share of mortgage-backed home purchases in Canada.
“Home purchases are increasingly being driven by existing owners,” the study authors write in their conclusion.
“Within this group, investors saw the largest increase in their share of home purchases during the COVID 19 pandemic.”
Because the study looked at mortgage data, it does not take into account homes purchased with cash or by corporations, the authors said.
The study found that first-time buyers accounted for 47% of the market as of June 1, 2021, up from 53% at the start of 2015.
Meanwhile, the percentage of regular buyers and investors in the market have both increased. In the study, “regular buyers” are those who buy a new house and resell the old one, while “investors” are those who buy a new house and keep their old one, often with the intention of renting one out. properties as a source of income.
Regular buyers represented 33% of the market in June 2021, compared to 30% in January 2015, and investors represented 21% of the market, compared to 18%.
During the COVID-19 pandemic, as home sales and prices soared, investors’ purchases increased the most. Investors bought twice as many homes in June 2021 as in June 2020, a 100% increase in the number of purchases.
For repeat buyers, the increase over the same period was 66%, while purchases by first-time buyers increased by 47%.
The Bank of Canada study was released the same week the BC government announced a record number of new home registrations in 2021.
“Registered new home data is collected at the start of a project, before building permits are issued, making it a leading indicator of real estate activity in British Columbia,” the province said in a statement. Press.
The latest figures from BC Housing show that 53,189 new homes were registered in British Columbia in 2021. This is a 67.5% increase from 2020 and the highest annual total since the provincial housing authority began collecting data on new home listings in 2002.
The total includes 12,899 purpose-built rentals, a 47.7% increase over the previous year.
“This report shows that we can rise to the challenge of increasing the supply of desperately needed rental housing for individuals, families and seniors in British Columbia, if cities partner with us to quickly obtain building permits. build for these registered units,” David Eby, BC’s Attorney General and Minister Responsible for Housing, said in the province’s release.
“The numbers show that together we can respond to the more than 25,000 new people who have moved to British Columbia in the past three months in search of housing, and the thousands more we know continue to move. ‘happen,” Eby added. “We can only succeed in this major challenge if we have committed partners in cities, the federal government, non-profits, First Nations and the private sector to get these registered homes built and opened.
However, the majority of newly registered homes are not rentals, and Bank of Canada data suggests that a significant number of them will be purchased by investors as BC’s housing market continues to become out of reach for many would-be first-time buyers.
In an interview earlier this month, UBC’s director of urban economics and real estate Thomas Davidoff told CTV News that current conditions benefit people who already own property, rather than to those trying to enter the market.
“If we persist in having an environment with very low interest rates and very high rent growth, then yes, I think it will be increasingly difficult for people to accumulate deposits and be really able to pay off mortgages over their working lives,” Davidoff mentioned.