Real estate inquiries from mainland China rose substantially in the Toronto area after Vancouver launched its foreign buyers tax in August. But sales resulting from those online searches haven’t materialized.

That’s the key finding of a report by Sotheby’s International Realty based on data from its partnership with Chinese real estate hub Juwai.com from both sides of China’s Internet firewall.

The Sotheby’s report reinforces findings by Ipsos for the Toronto Real Estate Board (TREB) that found only 4.9 per cent of transactions in the region last year involved foreign buyers.

The figure has drawn widespread skepticism from realtors and some consumers, who feel it is too low.

That's because there's a shortage of "reliable and verifiable data," on foreign ownership, said Sotheby's CEO Brad Henderson. So residents and realtors are instead relying on anecdotal information.

"People are angry prices have been increasing faster than incomes, so affordability has become a top of mind issue particularly for first-time home buyers," he said.

"People look for someone to blame. A very convenient person to blame is the foreign buyers. We've seen that happen in Vancouver in particular, and it's starting to happen more and more in Toronto," said Henderson.

Some of Sotheby’s findings on the motivations of foreign buyers differ from those identified in the TREB survey.

But the Juwai.com data agrees that most Chinese searches are motivated by a desire to live in the area or use the property as a base for accessing Canadian schools.

Only the U.S. and Australia get more searches on Juwai.com than Canada, says the report called, “China to Canada: International Home Buyer Insights,” published Tuesday.

Juwai.com searches on Toronto-area properties were on an average price of $428,928 — a little more than half of the average sale price last year, $740,685.

That differs from the perception that Chinese consumers were only looking at luxury homes, said Henderson.

"This data helped us to better understand there's a considerable number of people looking for homes in Vancouver or Toronto that are at or slightly below the benchmark price. In Calgary and Montreal it was actually slightly above the average price," he said.

Although realtors knew that access to Canadian education was important to Chinese property hunters, Henderson said he was surprised by the magnitude of that interest.

"People are looking for a place where family members can go for education or for own use. Own use isn't typically for principle residence, it's probably for a second or additional premises," he said.

"But tying up millions and millions of dollars isn't necessarily part of the strategy," said Henderson.

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The data also traces the effect of the 15 per cent foreign buyers tax and a 1 per cent vacant home tax in Vancouver, which was announced in July and implemented in August.

"We saw a modest increase in inquiries in Toronto in the third quarter (last year). We would have expected to see it a little bit higher,” said Henderson.

“It wasn't until the late part of the third quarter and early part of the fourth quarter that Ontario Premier Kathleen Wynne came out and said, 'No we're not going to do that,'" he added.

Inquiries peaked in November, up more than 80 per cent year over year. But that had fallen substantially to a 33 per cent year over year increase in December.

While Toronto led the Canadian market in sales above the $1 million mark last year, Sotheby’s report doesn’t correlate that to Chinese investment.

“Awareness of the city as a destination for immigration, education and investment has been sustained over the course of several years,” says the report, which attributes the growth to local demand.

Overall, interest in Canada is driven by financial security, family life considerations and access to education, it said.

While Vancouver home sales have plunged since the introduction of the new taxes last year, Sotheby’s expects local and international confidence will prevail and the market will stabilize in the run-up to spring thanks to the city’s strong economy. It also notes that the high-end real estate market has shown greater immunity to the new taxes.

The province has recently exempted people with work visas from the off-shore buyers' tax. Realtors are waiting to see if that is extended to people with student visas.

Henderson said that recent reports of growing interest by foreign buyers in Victoria is, in part, due to the new taxes. But it's also the continuation of a longer-standing trend in which Canadians could sell their Vancouver property and buy a comparable or better home in Victoria for less and pocket the equity.

"The tax accelerated that path because people could then purchase property if you're a non-Canadian, in Victoria which has got many of the same dynamics as Vancouver and not have to pay that 15 per cent tax," he said.

"The marginal buyers became additive to what was already a trend.”

A lot of property sites are blocked from Chinese consumers. But Juwai.com has worked with the government there so it has hosting facilities on both sides of the border, he said. Any listings on the Sotheby's platform are instantly available on Juwai.com, which draws 2 million inquiries a month from China.

The number of Chinese millionaires is expected to increase 74 per cent by 2020 to 2.3 million, according to a September press release announced the Juwai.com and Sotheby’s.

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