Foreign property tax will have no effect on affordability
Ephraim Vecina
Mortgage Broker News
Vancouver’s real estate boom has attracted a profusion of wealthy buyers eager to get their share of the market’s enormous gains, but by all accounts, the past decade has seen the focus shift to rich foreigners as the prime movers in the red-hot Canadian city.
With a front-row seat to this market transformation, broker Clarence Debelle certainly has no shortage of tales of moneyed Chinese who have gravitated to Canada’s high-volume, high-demand housing segment.
“I show homes every day to Chinese families from Shanghai, Beijing, cities I’ve never heard of, and sometimes it’s just the mother and kids because the father is working,” the Vancouver-based professional told Bloomberg, alluding to the increasingly common phenomenon of male parents working in China and the rest of the family staying in Canada.
Many of Debelle’s clients are high-powered Chinese professionals, with some even in the muti-billion wealth bracket. Their exodus to Vancouver should come as no surprise, he stated, considering Canada’s record-low interest rates and immigrant-friendly system.
“It’s typical of any wealthy person to move money abroad to preserve their wealth. They’re concerned about the market there and they want hard assets to preserve and protect their capital,” the luxury broker said.
“The number of people I deal with who have at least $2 billion, it’s amazing. I had a client who had $2 billion, was 43, and thought it was a good start,” he added.
The city’s intense growth—which has already surpassed other global heavyweights like New York and London—is showing no signs of halting in the near future. In June alone, the average price of a single-family property rose by 39 per cent year-over-year, up to $1.6 million.
From June 10 to July 14, foreign buyers purchased over $885 million worth of real estate in the Metro Vancouver area, approximately 10 per cent of total real estate sales volume in the region over those 5 weeks.
Housing has served as the vanguard in keeping the Canadian economy afloat, Statistics Canada revealed in its latest report. Together, foreigner-fueled real estate markets and stronger bank lending now represent around 20 percent of the country’s economic output.
“It’s not just the agents. It’s the guy at the dock unloading a Sub-Zero fridge or custom sink off the boat for the house. It’s the decorators and landscapers. Chinese investment has spurred an entire economy,” Debelle said.
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