Has the Vancouver market been impacted by foreign investment? I think it is safe to say, "Yes". Here are some simple facts that help us understand why.
- China's economy is almost 12.5 times the size of Canada's when looking at GDP on purchasing power parity. http://data.worldbank.org/data-catalog/GDP-PPP-based-table
- There is no private ownership of land in China. When you purchase a home, you are purchasing a lease to use the property for a maximum of 70 years. http://www.globalpropertyguide.com/Asia/China/Buying-Guide
- China's stock market is only 27 years old. The investment culture is to invest in hard assets, such as property, rather than stocks.
- The Chinese government can track foreign bank accounts but they can not track foreign bought assets such as property.
- As an international city, Vancouver real estate is inexpensive.
- Canada has a history of economic stability.
In the last four years housing prices in Vancouver have risen 47%, in London UK, 54%, and Aukland NZ 75%. http://www.economist.com/blogs/graphicdetail/2017/03/daily-chart-6
What might you expect in 2017 and 2018?
In July, the Chinese Government will further their capital restrictions and impact the middle range buyers ability to move money out of China. In anticipation of this, money has already been moved out but not necessarily invested yet. In general we should expect foreign investment to still be significant but not as significant as it has been couple of years.Read More