Locals blame foreigners for rise in real estate prices.
By Raif Karerat
WASHINGTON, DC: Vancouver’s attractiveness to foreign buyers has seen it meteorically rise to become the second most expensive housing market in the world, with the average detached home now worth $1 million.
The highly inflated values cannot be explained by local incomes, which are well below the average of major Canadian city centers, according to government statistics.
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According to a 2012 poll, just over half of Vancouverites believe there is too much foreign ownership regarding real estate in the city, and Eveline Xia counts herself among them.
Despite having a Master’s degree and solid career prospects, she might never be able to afford a home in the city where she grew up, reported Reuters.
Incensed at the notion, the 29-year-old grabbed a marker, hand wrote a sign listing her credentials, snapped a selfie, and posted it to Twitter under the hashtag, #DontHave1million.
Her tweet went viral, and a deluge of dissatisfaction with the state of the Canadian housing market and the foreign investment that has fueled its inflation.
“Average, hardworking Canadian residents are being forced to compete for housing with the global wealthy,” said Xia, who immigrated to Canada from China as child. “People here are getting angry.”
Last year, the West side of Vancouver had around 25 percent to 30 percent foreign buyers, mostly all of them from China, Ross McCredie, President and CEO of Sothebys International Realty Canada in Vancouver, informed Forbes.
“A lot of our Chinese buyers have been living in Canada almost all of their lives and have businesses still in China, through family,” said McCredie. “They didn’t sever ties with the mainland. So what we are seeing in Canada, with the currency weaker that it has been at 80 cents to the dollar, they have had the extraordinary benefit of growth in China in the past and they are still participating in the growth in China today. A lot of that money trickles back in to real estate.”
A recent study by Chinese real estate website Juwai concluded that Canada is the third-most attractive market for Chinese investors, after the U.S. and Australia.
“Canadian cities are like London or New York, a safe place to invest for the long term. Some people call Vancouver a ‘hedge city,’” Andrew Taylor, co-CEO of Juwai.com, told Huffington Post Canada. He added that the level of investment from China could soon rise, as the country is set to loosen rules on the transfer of wealth outside its borders.
“As Chinese buyers spread across the country, you could call Canada as a whole a ‘hedge country.”
Along with Vancouver, Toronto’s star is on the rise as foreign property investors flock to the city in droves due to its excellent value-for-price ratio.
Per Forbes:
What do foreign buyers see? They see a country that charts in the top 10 of best urban centers to live. They see they can buy middle class housing for $550 to $750 per square foot in new developments on the “center ice” of Toronto, homes for half a million dollars that would go for double that in Manhattan.
As far as luxury properties go, the luxury properties with brand names like Trump slapped by the lobby door on Bay Street are cheaper than they are in any city with decent bragging rights and caché.
In March, Toronto home prices rose 10 percent on an annualized basis, reported CBC News.
The influx of foreign buyers in Vancouver has contributed to a creeping xenophobia in a city long renowned for its inclusiveness.
Residents like Xia are urging the government to track international buyers, scrutinize the source of their funds, and tax property speculation, before the anti-Chinese sentiment reaches a tipping point, reported Reuters.
Last summer, an anti-immigration group covered up Chinese symbols on real estate signs in the affluent suburb of West Vancouver with stickers that read, “Please Respect Canada’s Official Languages.”
Police are also investigating incidents on neighboring Vancouver Island, where anti-Chinese pamphlets were distributed in affluent neighborhoods and signs for Chinese real estate agents were defaced with racial epithets and messages like, “Go home,” and, “Not welcome.”
2 Comments
One has to wonder how Vancouver is the 2nd most expensive place to buy real estate when it’s sitting in a prime earthquake/tsunami, and flooding zone. Even if a moderate quake were to hit the area, the land values will probably be cut in half overnight.
There is a reason people say earthquake insurance is a scam.. that’s because there will never be enough compensate everyone leaving most people with damage far exceeding what their wallet can handle.
Maybe you are not in Vancouver because if you were, you would know that EQ insurance covers structures only, not the land portion. So the structural claims will be quite limited in amount, relatively speaking.