Searches for Vancouver real estate in China tumbled to a fraction of its former levels last year, according to data from China’s largest real estate portal, Juwai.com.
The decline in interest from abroad could help explain the 40-per-cent decline in home sales the city has seen in recent months, and the 50-per-cent decline in the volume of money flowing through the market.
The data shows interest in other Canadian cities such as Toronto and Montreal spiked around the same time as it dropped in Vancouver — but those searches “did not result in matching surges in sales activity,” realtor Sotheby’s said in a report on the Juwai data.
Vancouver's waterfront at dusk. (Photo: Getty Images)
That report placed the blame squarely on B.C.’s 15-per-cent foreign buyer tax for the decline in interest. It noted that, in August of last year, the first month of the foreign buyer tax, searches on Juwai for Vancouver real estate were down 78 per cent from a year earlier. However, they were down 81 per cent in July, even though the governing B.C. Liberals only announced the tax in the last week of the month.
Juwai data shows that interest in $1 million-plus homes had already fallen by more than 22 per cent in the spring of 2016, well before the tax was announced.
Some market observers say China’s crackdown on foreign cash outflows — which began last year and intensified this year — is also affecting the market. As of January, Chinese nationals who want to exchange currency must sign a declaration promising not to use the money to buy real estate, among other things.
Not just investors
The Sotheby’s report found that education is the most common reason for Chinese nationals to buy homes in Canada, with more than 40 per cent citing that reason in Toronto, Vancouver and Montreal.
More than 20 per cent said they’re interested in Canadian real estate as an investment, and immigration was cited by fewer than 15 per cent in all cities. A quarter to more than a third said the home was for their own use, except in Calgary, where it was nearly 62 per cent.
Not just millionaires
Although foreign buyers are most closely linked with luxury housing, Sotheby’s said the majority of Chinese interest in Canadian housing focuses on the middle of the housing market.
The median price of a Vancouver property searched for on Juwai was $590,200 in Vancouver; $531,115 in Calgary; $488,012 in Montreal; and $458,928 in Toronto.
That’s “within the range of, and sometimes significantly below the average sale price of residential real estate within the market,” Sotheby’s said.
Toronto tops in popularity
Despite the perception that Chinese foreign buyers are particularly concentrated in Vancouver, the city with the most interest from these buyers is Toronto, Sotheby’s said.
“Toronto ranked as the top Canadian city of interest, receiving more enquiries than the next five cities combined,” Sotheby’s wrote.
“Vancouver received the second highest volume of property enquiries, followed by Montreal, Calgary and Ottawa.”