Housing investors face scrutiny as BoC warns over risks of market correction
来源: 大中报 南茜(Nancy Jin)
BoC has warned that Canada's housing market is at a high risk of correction, singling out domestic investors as a potential problem. The bank has cited its research showing that investors have made up 20 percent of property buyers since the pandemic. Meanwhile, a Teranet study has also revealed that "multi-property owners" have soared into the largest segment of residential home purchases, making up 25 percent of real estate transactions in 2021. Amid growing concerns over the impact of rising interest rates on the housing market, investors' role in the market volatility faces heightened scrutiny.


Investors are a natural part of any market. But buying strictly for capital appreciation can create instability if prices fall. A Realosophy study sheds light on the significant role investors, those who had rented out their recently purchased properties, played in Toronto's 2017 real estate bubble in the GTA market. Making up 16.5% of all home purchases in the area, these investors helped precipitate the rapid price appreciation in the 2016 market and the subsequent market decline in 2017. 
研究称,许多投资者进入市场时都坚信房价是绝对不会跌的。由于多伦多当时房价是年租金的28倍,很多2016年买房的投资者中 有95%入不敷出,既房租收入不足以支付每月开支。一般来讲,个体投资者的房贷违约率会高于购房自住者,因此在房价下跌时,这些投资者往往会第一个逃离市场,从而推动市场大幅滑坡。该研究显示,投资者最活跃的地区也是价格跌幅最大的地区。Richmond Hill和Newmarket是2016年GTA投资购房量最高的地区,占总交易量的34%和28%,2017年平均价格跌幅也最大,分别为$317,091和$238,866。
According to the study, many investors jumped into the market driven by the perception that price would keep rising.  With average prices in the GTA at 28 times of annual rent,  95 % of the investment properties purchased in 2016 were not making enough rental income to cover the monthly expenses.  Individual investors, who default on mortgage debt at a higher rate than end-users, are likely the first ones to exit the market when prices start to fall, thus accelerating the market decline. The study has found the areas that saw the highest level of investors' activities also experienced the steepest price drop. Richmond Hill and Newmarket, where investment purchases reached the highest level in GTA at 34% and 28% in 2016, respectively, experienced the sharpest average price decline of $317,091 and $238,866 in 2017.
But mom and pop home investors may not be the key players in today's property investment market. According to Transparency International Canada, billions of corporate funds have flown into the Canada’s housing market since 2008, as Canadian real estate went up in value. In 2018 alone, corporations –domestic or overseas spent nearly $3 billion on top Canadian real estate through cash or mortgage transactions. 

随着加国租房市场空置率低至3%以下,且住房危机在全国范围内爆发,出租物业越来越紧俏,吸引了大量企业资金流入租房市场。各种诸如养老基金和产业投资信托等大型机构投资也日益瞄准了加国租房市场,斥资数十亿购买可带来丰厚房租收益的房产市场。随着投资信托基金在租房市场上占据越来越大的位置,从零拥有率跃居2020年的20万栋,两家私有股权公司Starlight Investment 和KingSett Capital于去年11月以49亿元在加国各地购买了27000套出租单元。
With the country's rental vacancy rate below 3 percent and an affordable housing crisis raging across the country, rental properties have increasingly become coveted assets, drawing massive corporate funds into the market. Institutional investors – such as pension funds and REITs have increasingly set their eyes on the rental market, spending billions of dollars to snap up properties that can bring lucrative rental income. As REITs aggressively bolstered their presence in the market, going from owning no buildings to just fewer than 200,000 in 2020, two private equity firms Starlight Investment and KingSett Capital, bought 27000 apartment units across Canada for a sum of $4.9 billion last Nov. 
更令人吃惊的是,多伦多的公寓开发商Core Development已将触角伸进加拿大家庭住房出租领域。今年初,该公司宣布将花费$10亿元购置独立住宅出租,开加国之先河,并计划在于2026年在加国多个省份购置4000个独立屋单位出租。据该公司表示,其5000万元投资所购置的75套独立住宅,以呈正现金流。Core Development的成功将会吸引其他机构投资者步其后尘。
More shockingly, Core Development, a Toronto-based condo developer, has ventured into the family home rental business – an uncharted territory in Canada. It made a stunning announcement early in the year that it planned to buy $1 billion worth of single-family houses in Canada for rentals, with a medium-term goal to rent out 4000 units in several provinces by 2026. The company said that its 50-million investment on 75 properties had already generated positive cash flow. Core's success could entice other institutional investors to follow suit.  
Institutional investors with a business model focusing on rental market operations do not speculate on housing price appreciation. With deeper pockets, they can afford to play a long game, with the ability to ride out the temporary market crisis. Unlike individual investments, the corporate funds are unlikely to exit the market or expose the market to a higher chance of correction after a few interest rate hikes. More complete data over the role institutional investors have played in the real estate industry is crucial better to understand investors' impact on Canada's housing market.





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