Chinese interest in Vancouver property slipping

Mortgage Broker News

A website for buyers of overseas properties says Chinese nationals expressed interest in about US$1.45 billion worth of Canadian properties last year, with interest in Toronto and Vancouver slipping following the introduction of foreign buyers taxes.

Juwai.com says consideration of properties in Canada’s largest city dropped by 25 per cent in 2017 after nearly doubling between 2015 and 2016.

Vancouver inquiries fell 18 per cent last year after growing by 9.3 per cent the previous year.

Metro Vancouver has had a 15 per cent tax on foreign home purchasers since 2016. The new provincial government hiked the levy to 20 per cent and imposed it in the Victoria and Nanaimo areas, as well as the Fraser Valley and central Okanagan.

A 15 per cent tax was imposed in the Greater Golden Horseshoe area _ stretching from the Niagara Region to Peterborough _ on buyers who are not citizens, permanent residents or Canadian corporations. In the first month after the tax was imposed in late April, foreign buyers made up 4.7 per cent of home sales in the region, according to Statistics Canada.

With no tax in place, Montreal was the hot destination, growing by 84.5 per cent in 2017 and 43.3 per cent a year earlier.

A separate report says no additional foreign buyers taxes are expected to be imposed in Canada and Australia this year, with New Zealand being the only major investment destination considering one.

Juwai says Chinese were unfairly blamed for property price increases, even though data suggested it was due to other factors such as historically low interest rates.

More than half of Chinese buyers considering Canada were motivated to invest for their own use, nearly 26 per cent for investment and 17 per cent for education. 

The Canadian Press

Copyright © 2018 Key Media

Vancouver detached homes a buyers’ market

Steve Randall
The Vancouver Sun

Buyers looking for detached homes in Metro Vancouver have more choice as sales weakened again in June.

Detached home sales fell 42% to 766 and the Real Estate Board of Greater Vancouver says that the sector is leading the move towards a buyers’ market.

“Buyers are less active today. This is allowing the supply of homes for sale to accumulate to levels we haven’t seen in the last few years,” Phil Moore, REBGV president said. “Rising interest rates, high prices and more restrictive mortgage requirements are among the factors dampening home buyer activity today.”

Although new listings were down 7.7% across all residential property types year-over-year and down 17.2% from May 2018, total active inventory was 8,515, 40.3% higher than a year earlier.

While detached sales recorded the largest decline year-over-year, apartment sales were also down sharply (by 34.9% to 1,240) along with attached homes (down 37.3% to 419).

Price growth is slowing

The increased supply and weakened demand means that, although prices continue to rise, the acceleration of prices is slowing.

The benchmark price for a detached home is $1,598,200, up 0.7% from a year earlier but down 0.6% compared to May 2018.

For apartments the benchmark is $704,200, up 17.2% y-o-y and up 0.4% m-o-m; for attached homes the benchmark price of $859,800 is up 15.3% y-o-y but virtually unchanged month-over-month.

“With reduced demand, detached homes are entering a buyers’ market and price growth in our townhome and apartment markets is showing signs of decelerating,” noted Moore.

Copyright © 2018 Key Media Pty Ltd

RBC sounds alarm

Canadian Real Estate Wealth

An RBC report says housing affordability in Canada worsened in the first quarter, ending a one-quarter reprieve, the first in two and a half years.

The proportion of median pre-tax household income needed for mortgage payments, property taxes and utilities rose 0.4 percentage points from the fourth quarter to 48.4 per cent.

The move reversed a 0.3 percentage point drop in the fourth quarter.

Mortgage rates increased in the previous two quarters, but a drop in home prices mainly in the Greater Toronto Area, trimmed ownership costs modestly.

The report added that an expected one percentage point increase in the Bank of Canada’s overnight rate to 2.25 per cent by the first half of 2019 is poised to worsen housing affordability.

Home ownership costs in the Greater Vancouver Area reached a record high of 87.8 per cent in the first quarter, rising 1.5 percentage points in the quarter to what is considered a crisis level. Victoria was also high at 62.7 per cent.

The Greater Toronto Area saw affordability improve slightly to 74.2 per cent as a dip in home prices counteracted higher interest rates.

Affordability eroded modestly in most other Canadian markets as higher interest rates outpaced stable housing prices.

Saskatoon, Ottawa, Halifax and St. John’s, N.L., saw the largest deteriorations in affordability in more than a year, but housing costs remained low at between 27 and 36.6 per cent.

The report says stress may be building in the Greater Montreal Area, which saw costs reach their highest point since 2011 at 43.7 per cent. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

David Eby focused on monetary transactions

Canadian Real Estate Wealth

British Columbia Attorney General David Eby says terms of reference are being discussed as the province moves ahead with the second phase of its battle against money laundering.

The first phase was unveiled last week with a report from former RCMP deputy commissioner Peter German, detailing money laundering in the gaming industry.

Part two will focus on monetary transactions linked to the housing market and Eby says he is working with Finance Minister Carole James to identify issues.

German says an examination of money laundering within the real estate industry must tackle problems linked to development and mortgages, as well as the sale of commercial and residential properties.

He predicts the second phase will be a “larger beast to tackle,” because he says real estate drives the economy in B.C., while gaming has had less of an overall impact.

German will also author the second report but says his investigation has just begun and there’s no word on a timeline for completion.

Phase one of German’s work, a 247-page report that identified blatant examples of money laundering in Metro Vancouver casinos, makes 48 recommendations and seeks sweeping reforms.

Those include appointment of an independent regulator overseeing the casino industry and creation of a specialized, around-the-clock police force to battle money laundering.

German found at least $100 million has been laundered through casinos but admits the total could be much higher, although without a forensic audit, he can’t provide an estimate.

Eby said last week that casino money laundering was linked to the opioid crisis and could also be connected to real estate. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

New-home project, George, in Port Moody is artistic and elegant, while pushing boundaries

Mary Frances Hill
The Province

George

What: 179 condos and 73 townhomes

Where: 3010 St. George Street, Port Moody

Residence sizes and prices: One- to three-bedrooms, 657 to 1,358 sq. ft.; condos starting from $484,900, townhomes starting from mid $800,000s

Developer and builder: Marcon

Sales centre: 3001 St. Johns Street, Port Moody

Hours: By appointment

Telephone: 604-469-4036

Among all the pieces that Linda Lam and Gannon Ross Designs used in the display space at the George new-home project, there’s one that captures the vision they had in mind: a dining table in the open-concept space that offers equal amounts of sophistication and edge, with a taste of local craftsmanship.

“We have plenty of favourites [at George], but we would say the dining table takes the cake. It was custom designed and we had Union Wood Co. in Vancouver make it for us locally. It reflects the design concept perfectly: artistic, edgy and elegant,” says Lam, Gannon Ross’s lead designer for Marcon’s community of condos and townhomes in Port Moody.

It’s that “edge” that distinguishes George, courtesy of Lam’s ability to see the sculptural qualities in furnishings and her creativity with shade and design.

Lam’s penchant for metal work is clear in her choices, such as in the living room chairs with metal hairpin legs, steps away from metallic mesh-back kitchen island chairs.

These touches of industrial style offset the warmer layered greys and reflect Port Moody’s own history as Western Canada’s busy transportation terminus.

“The metal and sculptural elements in the space bring an edgy and refined character and is intended to complement the layers of soft and warm textures,” Lam says. “This also brings a subtle industrial feel that reflects a part of Port Moody’s unique community.

To that end, custom woodworkers Union Wood Co., based in Gastown, were commissioned to craft the table from reclaimed lumber.

Lam used a number of grey shades, each slightly different than the next, to create a light palette and set off the matte black of the faucets in the kitchen.

“Layering with different shades and textures was a key ingredient in bringing in a lot of interest and life in the space,” she says. “The dark hardware is a finish that especially adds richness and depth.” In another scheme, the grey appears in a more dramatic form, as the dark upper cabinets in a offset the lighter kitchen storage below.

“In this scheme, we wanted to exude a moody and edgy feeling that is a bit sexier than what Port Moody has typically seen,” Lam says. This also offers homebuyers quite a different option from the monochromatic look.”

In and ensuite bathroom, Lam doubles the mirrors so they resemble two columns above the solid quartz countertops; sconces grace every side of these vertically placed mirrors. “We wanted the ensuites to have character and be flawlessly elegant, and the elongated black framed mirrors and unique brass sconces achieves this.”

© 2018 Postmedia Network Inc.

Supply of homes for sale hits three-year high

The Province

The supply of homes in Metro Vancouver’s real estate market hit a three-year high as sales dipped below historical averages last month.

The Real Estate Board of Greater Vancouver reports there were 2,425 home sales last month, a 37.7 per cent decline from June 2017.

Board president Phil Moore says rising interest rates, high prices and more restrictive mortgage requirements are among the factors dampening home buying activity.

Moore says that has allowed the supply of homes for sale to reach levels that they have not seen in the past few years.

There were 5,279 detached, attached and apartment properties newly listed for sale in Metro Vancouver in June, for a total of almost 12,000 for sale, reaching the highest listings figures since June 2015.

The composite benchmark price for all residential properties in Metro Vancouver is $1,093,600, representing a 9.5 per cent increase over June last year.

© 2018 Postmedia Network Inc.

Feng shui important for Chinese buyers

Neil Sharma
Canadian Real Estate Wealth

Predominantly Chinese foreign buyers have stringent checklists for Canadian properties, whether they intend to live in them or not.

“Feng shui is tied into it,” said Jennifer Chan, a broker with Engel & Völkers Toronto Central. “You can say it’s superstition, but it’s not; it’s tied into the culture deeply. If you’re buying a house, you wouldn’t want a giant tree in front of your porch. It’s not good for technical reasons, but it’s also not good for feng shui. You don’t want light or electrical polls or giant trees in front of your door.”

Feng shui can perhaps be best described as a form of pseudoscience which purports to direct and abet harmonizing energies throughout an abode, and in the process makes them more liveable for the inhabitants.

An additionally important facet of feng shui is location. Religious edifices, whether churches or temples, usually dominate the streets on which they’re located, therefore, they have a substantially negative effect on homes’ feng shui.

“They bring a lot of traffic but also because, like with Buddhist temples a long time ago, crematoriums used to be close by,” said Chan.

According to Engel & Völkers Toronto Central’s broker of record, feng shui adherents do not like living in homes wherein people have died. Moreover, numbers both good and bad are crucial within the philosophy.

“The buyers from China are also superstitious with numbers. Four is not a good number,” said Anita Springate-Renaud, who added that fewer buyers from Hong Kong adhere to feng shui than their Mainland counterparts.

“But as of the last 20 years, the Mainland is who is coming over with money. The younger generation isn’t as superstitious as the elder generation, but if the parents are footing the bill then they have to toe the line. I have a buyer who bought a property that had the address 44. If the money is coming in from a parent or grandparent, then they will adhere to those cultural norms because it’s not their money.”

Because China is geographically huge, different subcultures can be found through the country, so Chinese buyers typically choose areas with cultural amenities that suit their regional cultures.

“Ease of going to entertainment amenities and community events within their group” is important, said Chan. “So when they buy homes, they want to access their own mini subculture.”

However, there’s one main driver that often supersedes feng shui.

“Schools are very important,” said Springate-Renaud. “It doesn’t matter if it’s a public or private school, they want to be in a good school district. It’s a main driver for them.”

Copyright © 2018 Key Media Pty Ltd

About 87 per cent of income needed to cover expenses in Vancouver, setting new high: Report

Ross Marowits
The Province

Housing affordability in Greater Vancouver reached a “crisis level” in the first quarter, with additional interest rate hikes expected to take another bite out of Canadian housing affordability in the months to come, according to a Royal Bank report.

The share of household income required to cover mortgage payments, property taxes and utilities in the Greater Vancouver Area reached a record high of 87.8 per cent in the first quarter, rising 1.5 percentage points from the fourth quarter and up 9.5 per cent from the prior year.

“And things could get worse if — or when — interest rates rise further,” said the report by RBC chief economist Craig Wright and senior economist Robert Hogue.

A cooling in the market may take pressure off prices but it’s unlikely to ease affordability tensions, they wrote.

The cost of home ownership in Victoria was also high at 62.7 per cent, up from 48 per cent in mid-2015.

The Bank of Canada is expected to increase its overnight rate by one percentage point to 2.25 per cent by the first half of 2019.

Growing household income and cooler housing markets in some areas should provide some limited offset.

Nationally, the proportion of income required to pay home ownership costs rose 0.4 percentage points from the fourth quarter to 48.4 per cent.

The move reversed a 0.3 percentage point drop in the fourth quarter.

“Well, the winning streak for housing affordability in Canada ended … at just one quarter!” said the report.

Mortgage rates increased in the previous two quarters, but a drop in home prices — mainly in the Greater Toronto Area — trimmed ownership costs modestly.

The Greater Toronto Area saw affordability improve slightly to 74.2 per cent as a dip in home prices counteracted higher interest rates.

The mortgage stress test that came into effect in January added downward pressure on property values that were still adjusting to new measures in Ontario including a 15 per cent foreign buyer tax and the expansion of rent controls to all private rental units.

RBC said home prices in and around the country’s largest city should move slightly higher in the near term after declining modestly in the past two quarters.

Saskatoon, Ottawa, Halifax and St. John’s, N.L., saw the largest declines in affordability in more than a year, but housing costs remained low at between 27 and 36.6 per cent.

“This shouldn’t raise too many concerns at this stage because the level of the measure for each of these markets remains close to its historical average — indicating that any affordability-related stress isn’t abnormally high,” said the report.

However, stress may be building in the Greater Montreal Area, which saw costs reach their highest point since 2011 at 43.7 per cent.

“Montreal’s housing market continues to show all-round, solid momentum and steadily rising prices in the early part of 2018,” RBC said. “The flipside, though, is that it’s becoming less and less affordable to own a home in the area.”

Ownership costs rose slightly in Saint John in the first quarter, but the New Brunswick city was the most affordable of those tracked by RBC at 25.9 per cent.

Halifax affordability was resilient at 32.7 per cent, with a 1.2 per cent decrease in resales in the first quarter, compared to 13 per cent drop nationally.

Housing remains inexpensive outside Canada’s three hottest housing markets — Vancouver, Toronto and Victoria, said a separate report from the Bank of Montreal. In most cities, property costs are less than four-times family income while mortgage payments consume less than 20 per cent of salaries, which is little changed from the mid-2000s.

“Borrowing five-year money costs little more today than five years ago and remains well below historic norms,” said BMO senior economist Sal Guatieri.

“Government intensification policies that restrict the supply of ground-related units, low joblessness and well-paying, high-tech jobs are also cushioning prices.”

© 2018 Postmedia Network Inc.

Purple Bricks has agreed to acquire a commission-free network

Steve Randall
Mortgage Broker News

A real estate brokerage firm which has already launched in the UK, Australia and the US, is coming to Canada.

Purple Bricks has agreed to acquire the commission-free networks DuProprio and Comfree (DPCF) for C$51 million with the deal expected to close this week.

The British firm was founded in 2014 and combines technology and local real estate experts to offer what is calls the next-generation real estate brokerage.

Global CEO Michael Bruce says there are similarities between the firm and DPCF.

“DPCF has developed a strong presence in Canada by delivering a flat-fee, cost-effective, professional real estate service challenging the conventional agency market. Their model of bringing a range of service packages and support, with access to expertise from coaches to legal professionals, is proving highly attractive to the Canadian public, and has aspects in common with the Purplebricks model and ethos in the U.K., Australia and the U.S.”

Acquisition will enable growth for Canadian team DPCF operates the DuProprio brand in Quebec where it claims a 20.1% market share while its ComFree brand in the rest of Canada has a 2% share in Ontario and 2.3% in Western Canada.

It currently employs 400 people in offices in Québec, Montreal, Hamilton, Winnipeg, and Edmonton. It was acquired by Yellow Pages Digital & Media Solutions Limited in July 2015.

“We admire Purplebricks for what they have achieved across three continents in just four years,” said Marco Dodier, President and CEO of DuProprio. “We share the team’s ambition and desire to offer consumers a new and better way to buy and sell property. To have their support, expertise and financial backing will help propel DPCF to even greater heights and allow us to replicate our success in Québec across the rest of Canada.”

Copyright © 2018 Key Media