10/28/2016 05:03 EDT | Updated 10/28/2016 06:47 EDT

Foreign Buyers In Toronto Snap Up 5% Of New Condos. But There Could Be More.

An expert said those buyers actually play a "rather limited role."

Foreign buyers only have a "limited" influence on the Greater Toronto Area's new condo market, says a study out of market research firm Urbanation.

But that study didn't account for how much more money is being spent on foreign-owned units — a key metric for evaluating outside influences on a housing market.

A woman walks past graffiti which reads, "KA-CHING" near condominium buildings behind a lot of vacant land that is boarded up in Toronto on Sept. 21, 2012. (Photo: Mark Blinch/Reuters)

The study, released Thursday, shows that foreign buyers only represent five per cent of sales that have happened in condominium projects that are currently under development.

That's far fewer than the share of domestic investors, who made up 52 per cent; the remainder, 43 per cent, was made up by GTA residents who planned on occupying their units.

But even that five per cent figure doesn't capture the magnitude of foreign buying, Urbanation senior VP Shaun Hildebrand told The Huffington Post Canada.

'Foreign buyers'

Foreign buyers were defined in the study as "purchasers whose primary residence is outside of Canada," while domestic buyers represented people who had primary residences in Canada but did not intend to self-occupy their units.

Many foreign buyers could have dual identifications, local intermediaries, or else have relatives purchase units on their behalf. Such purchasers were counted as "domestic investors."

"I would say that foreign wealth represents a much larger share than the number of pure foreign buyers," Hildebrand said.

"I would say that foreign wealth represents a much larger share than the number of pure foreign buyers."

Urbanation also found that foreign buyers alone could make up a larger share of buyers in projects that are known to attract purchasers with primary residences outside Canada.

In buildings that attract foreign buyers, the share of units sold to them could be anywhere between one and 25 per cent, compared to a range of five and 90 per cent for domestic investors.

Urbanation therefore concluded that foreign buyers have a "rather limited role" in new GTA condos.

But these figures alone don't necessarily capture the influence of foreign investment.

How much do they pay?

The study didn't contain information related to how much money foreign buyers are paying for new condos in the GTA — which is crucial to examining how much foreign money is affecting real estate activity.

The Government of B.C. started collecting data related to foreign investment in real estate earlier this year.

An analysis of sales between June 10 and July 14 found that foreign buyers were investing an average of $946,945 in residential real estate, while Canadian citizens and permanent residents were paying $911,425.

Hildebrand told HuffPost Canada that Urbanation's study is the first of its kind, but that purchase prices are "something we can perhaps look at in future."

Toronto's CN Tower stands behind a condo building. (Photo: Brendan Hunter/Getty Images)

The study came amid reports that purchasers from outside Canada are entering Toronto's real estate market after B.C. introduced a 15 per cent property tax foreign buyers over the summer.

TD economist Diana Petramala noted last month that Toronto's sales-to-population ratio has grown to 1.9 in recent months, up from an average of 1.6.

And last month, CIBC economist Benjamin Tal said Ontario might not have any choice but to implement a foreign buyers tax because "everybody else is doing it."

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