Over the past few years, and even today, some politicians have pointed to speculation as the main culprit behind Canada's high home prices. They repeatedly point to foreign buyers and resellers as two groups that various governments have introduced targeted bans and taxes against.
Last year, the federal government's Foreign Buyer Ban came into effect, preventing foreigners from purchasing residential property in Canada. The policy has since been amended and extended, despite little evidence that it has had any positive effect on home affordability.
In 2022, the federal government will also introduce an anti-flip tax, taxing profits on homes flipped within a year of purchase as business income rather than capital gains. The British Columbia government is set to follow suit, introducing its own resale tax, due to come into effect on January 1, 2025.
While the former (the influence of foreign buyers) is difficult to quantify, the latter (resale activity) is much easier.
Earlier this month, the Bank of Canada released new data on home resale activity across Canada, including data on home sales that took place within six and 12 months of purchase over the past 10 years.
“Increased home resale activity, when accompanied by renovations, can improve the quality of the housing stock, but it may also signal that local markets are becoming increasingly susceptible to speculative behavior,” the Bank of Canada said.
However, as the British Columbia government points out, resales can also occur as a result of life circumstances such as a job change, death or birth, meaning the actual rate of speculative resellers is even lower than the resale data indicates.
Here are the figures for major cities across Canada and across the country:
Canada
Nationally, resales within 12 months accounted for just over 2.11% of all home transactions going back to the first quarter of 2014. They then hovered around 2% until around 2016, when they spiked to 2.58% and stayed there for about a year before peaking at 2.61% in the first quarter of 2018. Since then, the share of resales has declined sharply, bottoming out at 1.90% in the third quarter of 2021.
Resale activity then steadily increased again, recovering to 2.44% in Q3 2022, then declining slightly again to 2.50% in Q1 2023, before beginning an upward trend again, reaching 2.58% as of Q4 2023.
Resales that took place within 6 months showed a very similar pattern, but the percentage of home transactions was much lower compared to resales that took place within 12 months. This order holds true for almost all major cities.
Reversals across Canada within 6 and 12 months. (Bank of Canada)
Toronto
However, looking at national data doesn't tell the whole story, as different markets behave very differently. In Toronto, the resale share over the past decade started at 2.30% in Q1 2014. It then dropped to 2.06% by Q4 2015 before rising sharply to peak at 2.72% in Q1 2017.
Since then, property resale activity has steadily declined over the course of four years, hitting a bottom of 1.22% in Q2 2020. It then hovered around 1.30% for just over a year, rising to 1.55% in Q2 2022, before steadily declining again since, finishing at 1.24% in Q4 2023, the lowest level in the past decade.
In Toronto, resales take place within 6 and 12 months. (Bank of Canada)
Montreal
Showing potential differences between various Canadian markets is Montreal, whose trends are nearly the opposite of Toronto. After starting at 1.37% in Q1 2014, resale rates rose to 1.45% by Q2 2015 before bottoming out at 0.95% in Q4 2016.
But since then, in stark contrast to Toronto, the rate of remodeling has steadily increased for six years, peaking at 1.88% in Q3 2022. However, over the following year, remodeling has declined again, finishing at 1.47% as of Q4 2023.
In Montreal, they are resold within six and 12 months. (Bank of Canada)
Calgary
It may come as a surprise to some, but Calgary has led the country in property resale activity for nearly eight years. After starting at 2.46% in Q1 2014 and bottoming out at 1.64% in Q4 2015, Calgary property resale activity has steadily increased over the years, reaching 6.35% in Q4 2019. This is more than double the rate achieved by any other major city except Edmonton during the same period.
Resale activity then declined for about two years, reaching 3.24% in Q1 2022, a level higher than all other major Canadian cities (except Edmonton) at the time. Resale activity then picked up steam again and has been on an upward trend ever since, reaching new heights of 6.54% in Q4 2023, matching the highest achieved by a major city in the past decade (Edmonton in Q1 2019).
In Calgary, resales take place within 6 and 12 months. (Bank of Canada)
Vancouver
Vancouver's numbers over the past decade have been a bit more volatile: the resale share was 2.74% in Q1 2024, then dropped to 2.57% in Q4 2014, before skyrocketing to 3.57% in Q2 2016. Resale activity has since declined sharply, bottoming out at 2.33% in Q3 2019.
Since then, the rate of property resales has gone up and down multiple times, but increased dramatically from 2.41% in Q3 2012 to 3.46% in Q4 2022. However, after regaining momentum, property resales have declined sharply again, to 2.87% as of Q4 2023.
The idea of a new state resale tax was first floated by Premier David Eby during the 2022 Q3 election campaign, when resale activity was at a six-year high, perhaps confirming Premier Eby's concerns, but figures since then suggest we may already be over the hump.
In Vancouver, resales take place within 6 and 12 months. (Bank of Canada)
Toronto vs. Montreal vs. Calgary vs. Vancouver
Data for Toronto, Montreal, Calgary, and Vancouver side-by-side. (Bank of Canada)