Few Foreign Buyers in Québec
JLR Recherche Immobilière recently published a study about foreign buyers in Québec. The firm compiled residential transactions between 2005 and 2013 in which the buyer indicated that their main residence was located outside of Canada. There were 3,837 transactions during this period by foreigners, representing only 0.35 per cent of all sales registered in Québec.
Most of the foreigners who concluded a real estate transaction in Québec were American, representing 59 per cent of sales during this period. However, Americans have neglected the Québec real estate market since the financial crisis of 2008. In 2005, Americans represented more than 85 per cent of foreign buyers, while in 2013 this proportion fell to only 30 per cent. In contrast, purchases from foreign buyers other than Americans have increased. The second largest group came from the Euro Zone (primarily France), representing 18 per cent of transactions over the period being studied. From 2005 to 2013, this group increased its presence in Québec by 69 per cent. Chinese buyers also increased their presence in Québec, but they were very few.
The study revealed that, proportionately, more foreigners are buying condominiums (0.67 per cent of sales) as compared to single-family homes (0.26 per cent) and plexes (0.20 per cent). Moreover, they are generally buying more expensive properties than Quebecers. The median price of condominiums bought by foreigners was 50 per cent higher than those bought by Quebecers. For the segment of properties sold at $800,000 or more, foreign buyers represented slightly more than 2 per cent of the market from 2005 to 2013.
The Montréal Census Metropolitan Area (CMA) is by far the preferred destination for foreigners (52.7 per cent). This can be explained by the attraction of Montréal as the second largest city in Canada. The Québec City CMA attracted only 8.4 per cent of foreign buyers, while the Gatineau CMA attracted 2 per cent.
Finally, the study highlights the fact that real estate transactions by foreigners are highly dependent on global economic conditions. When economic conditions are favourable, more foreigners want to invest in Québec’s residential real estate market, but they abandon this idea when the economic situation becomes more difficult. With a Canadian dollar that has been losing value against certain currencies for some time now, property sales to foreigners may increase. However, the OECD’s perception that Canada’s real estate market is overvalued may cool interest from potential foreign buyers.