Major Canadian bank says “no thank you” to foreign capital

No apologies were uttered by Royal Bank of Canada CEO David McKay when he declared his stance on foreign investment at a recent bank conference.

“We do not need foreign capital using Canadian real estate as a piggy bank,” said McKay, according to Bloomberg. “If capital is coming in to sit in a home, unproductively, and is distorting your marketplace and the livelihood of your residents — no thank you.” McKay’s bank, RBC, is the largest mortgage lender in Canada.

McKay’s statement comes as the government continues its crack down on foreign capital pouring into housing markets in the cities of Toronto and Vancouver by introducing new regulations and taxes. Housing markets in both cities have been on fire for years putting local residents in a pinch and even pushing some Toronto developers into American markets.

McKay admitted surging home prices are being caused by a “cocktail of factors” in addition to foreign buyers, such as the cost of land and population growth, and is in favor of intervention on all fronts, including newly implemented lending rules for would-be home buyers.

All McKay’s looking for is “a little bit more healthy dynamics,” and he is getting his wish: Toronto’s housing market is in correction according to the Toronto Real Estate Board’s data which recorded February as the city’s weakest month in homes sales in nine years. [Bloomberg] — Erin Hudson