A Canadian bank has drawn up figures for how much Chinese money is coming into Vancouver and Toronto's real estate markets.
And it's big.
National Bank financial analyst Peter Routledge has calculated that Chinese homebuyers may have bought as much as 33 per cent of the total housing volume in Vancouver, and 14 per cent in Toronto, last year.
A home on Vancouver's west side that hit the market for $6.88 million. It had a gold-plated toilet. (Photo: John Lehmann/Globe and Mail via CP)
He revealed the numbers in a report titled "Implications of the 2016 Canadian Federal Government Budget," released Wednesday.
Routledge came to his conclusions using two sets of data: one from the U.S. National Association of Realtors (NAR), the other from a Financial Times survey of 77 affluent and high net worth individuals from China — "not a statistically significant sample size," he admitted.
The NAR data showed that home purchases by Chinese buyers in the United States had grown from US$4.1 billion in 2009 to $28.6 billion in 2015.
Meanwhile, the Financial Times survey showed that, of those Chinese who bought property abroad, 33.5 per cent bought property in the U.S. last year, compared with 11.7 per cent in Vancouver and 8.3 per cent in Toronto.
From this, Routledge hypothesized that "for every three high net worth investors from China who purchase a U.S. residence, one purchases a residence in Vancouver."
He also surmised that one bought in Toronto for every four who bought in the U.S.
These calculations helped him conclude that Chinese homebuyers had spent $9.9 billion (C$12.7 billion) on Vancouver real estate last year, and $7 billion (C$9 billion) in Toronto, for 33 per cent and 14 per cent of total purchase volume, respectively.
Routledge admitted that this was a "back-of-the-envelope" attempt to determine how much of the Vancouver and Toronto markets are made up by high-end Chinese buyers.
"Not a statistically significant sample size."
But he also noted that the results corresponded to ownership patterns uncovered in Vancouver by urban planner Andy Yan last year.
Yan, a researcher with Bing Thom Architects and acting director of Simon Fraser University's City Program, looked at title records for 172 properties on Vancouver's affluent west side.
He found that 66 per cent of the homes were owned by people with non-anglicized Chinese names — suggesting they were recent immigrants or foreign residents.
Routledge's report came after the federal government earmarked $500,000 for Statistics Canada to study the impacts of foreign ownership in Canada's real estate market.
He noted that the budget for this effort totals "27.5 per cent of [the price of] an average detached home in Vancouver."
This is "at the very least, a touch on the low side," he said, adding he hopes that cities and provinces add some money to the study effort.
The British Columbia government announced earlier this year it is studying the level of foreign ownership in the province's housing markets.
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