(Yicai Global) Jan. 2 -- Chinese purchasers makes up 70 percent of overseas homebuyers in Toronto, Ontario, and are the main reason behind rising house prices in the city, according to an official report from the North American nation.

Overseas buyers in Ontario paid an average CAD977,600 (USD780,000) per transaction in the four months after the provincial government rolled out a 15-percent tax for foreign homebuyers. Over the same period, locals paid an average of CAD659,500, Singtao Daily reported, citing Canadian news outlet The Globe and Mail as reporting on Dec. 29.

The Ontario government brought in the tax in April to fend off speculation after house prices in Toronto leapt 33.2 percent on the year in March.

Foreign buyers play a pivotal role in soaring house prices, especially in high-demand areas, said Benjamin Tal, an economist at the Canadian Imperial Bank of Commerce.

This triggers a ripple effect, added Josh Gordon, a professor at Simon Fraser University. Overseas buyers prefer luxury properties, and as they drive up the prices of these homes, locals who can no longer afford these houses turn to areas where prices aren't so steep. This in turn drives up real estate values in cheaper areas.