Hafez Realty News

Chinese home buyers turn attention away from Vancouver

Potential Chinese property buyers dramatically shifted their inquiries from Vancouver to other major Canadian cities after a foreign-buyer tax was introduced in Vancouver this past summer, according to data from Chinese foreign-property portal Juwai.com.

 

Inquiries for Vancouver properties on Juwai – China’s largest international-property website – fell 81 per cent in July compared to the same month a year earlier, and 78 per cent in August, and continued lower through the remaining months in 2016.

 

At the same time, inquiries spiked in other Canadian cities, with Toronto climbing 62 per cent in August and 72 per cent in September, and continuing higher throughout 2016. The number of Calgary inquiries soared more than 1,000 per cent in August and 420 per cent in September, while Montreal saw a 152-per-cent spike in September as more Chinese buyers started looking beyond Vancouver and Toronto.

 

The data provide another indicator of the impact of a new 15-per-cent tax on foreign buyers purchasing property in Vancouver, which was announced last July and took effect in August and is credited as a factor in a slowdown in Vancouver sales. While data are not systematically collected on foreign buyers in other Canadian markets, the Juwai numbers suggest a rapid shift of focus among potential Chinese purchasers to other cities.

 

Brad Henderson, chief executive officer of Sotheby’s International Realty Canada, said he believes the increased inquiries haven’t translated into sales because property buyers often take months to make purchase decisions, but he anticipates growth in sales in 2017, and believes Chinese buyers will also return to Vancouver as they absorb the news of the tax.

 

“It may not necessarily have the same return as it did from an investment standpoint, but there are so many other reasons for people to want to consider Vancouver that it makes sense to us that we would see an increase in activity and actual sales in 2017 because a lot of dynamics that were at play in 2016 before the tax are still in play today,” he said.

 

Sotheby’s has partnered with Juwai to reach the Chinese market, and to compile data on Chinese inquiry trends.

Mr. Henderson said there is a perception that many Chinese buyers are speculating in Canadian real estate, but the survey suggests most buyers, or their university-aged children, will live in the homes they purchase.

 

Juwai surveyed its users about their reasons for looking at properties in Canada, finding the most cited reason for making purchases in Vancouver, Toronto and Montreal was to provide housing for high-school or university students who are being educated in Canada. The next most common reason for homes in Toronto and Montreal was “own use” by buyers looking for a second home in Canada.

 

Purchases as investments were the third most popular reason cited by potential Chinese buyers, followed by purchases for people planning to immigrate to Canada.

 

In Calgary, by contrast, “own use” was overwhelmingly the top reason for buyer interest, followed more distantly by investment, education and immigration.

 

The Juwai data also showed most potential Chinese buyers are not looking for luxury homes. The median price range of property inquiries in Vancouver in 2016 was $590,200 and in Toronto was just $458,928, both well below the average home sale price of $897,600 and $740,685 respectively in those two cities.

 

Mr. Henderson said the price-inquiry data support the survey findings that many potential Chinese buyers are looking for condos or smaller units for their children or as second homes, and are not primarily searching for larger family homes.

 

Vancouver’s new tax is not the only factor drawing more Chinese interest to cities like Calgary and Montreal, he added. While he expects Toronto’s market to continue to have stable interest from Chinese buyers, Mr. Henderson said some potential buyers are finding the city as unaffordable as many locals.

 

“As a foreign buyer … you’re not present in the marketplace, and it’s a little harder if there’s a multiple-offer situation for you to be completely familiar with what you might have to do,” he said. “There’s a certain exhaustion that comes with being in multiple offers and losing on a number of occasion, so that causes people to look outside of the centre.”

 

: Globe & Mail

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