Chinese investors' global
hunt for real estate is helping drive Vancouver
home prices to record highs and the city, long among top destinations for
wealthy mainland buyers, is feeling the bonanza's unwelcome side-effects.
The latest wave of Chinese
money, linked in part to Beijing's
anti-graft crackdown, is flowing into luxury hot spots. But it has also started
driving up housing costs elsewhere in a city which already ranks as North America's least affordable urban market.
For decades, Vancouver, along with Hong Kong, Sydney
and Singapore and, more
recently, New York and London has been attracting Chinese and other
Asian buyers.
And just like those other
cities, Vancouver
got caught in the most recent buying frenzy, which realtors say has intensified
after President Xi Jinping announced his anti-corruption crusade in late 2012.
"In the last year,
there's been the corruption crackdown in China and a lot of people have seen
their wealth evaporate over there because of that," said Dan Scarrow, a
vice-president at MacDonald Realty. "So they want to put it somewhere they
perceive as safe and there's nowhere safer than the West."
Canada does not track
foreign property buyers, but analysis of city assessment data carried out by a
leading urban planner and made available to Reuters helped identify Vancouver's
hottest neighbourhoods. Interviews with realtors active in those areas
confirmed the perception that Chinese buyers were largely behind the latest
rally.
City-wide home values are
already up more than 35% since 2009 and realtors are saying that more than half
the buyers in prime markets are mainland Chinese.
The impact of the latest
inflow of foreign cash is particularly acute for Vancouver, its market is already tight
because of limited building space and a decade-long nationwide property bull
run fuelled by low borrowing costs.
The money flow has
also transformed the DNA of the city. Condo towers in Vancouver are now built
without a fourth floor, as that number is unlucky in Asian cultures, and wok
kitchens - a second kitchen for cooking with a smoky wok - are standard in most
new homes.
The influx is also having
a trickledown effects as people sell out in prime locations and move to other
neighbourhoods, driving up prices and widening the gap between housing costs and
the condition of the local economy.
Vancouver has been ranked the second least affordable major
city after Hong Kong for the past three years in an annual survey by think tank
Demographia, which tracks housing costs
and incomes in top markets such as New York, Sydney, Singapore
and London.
Info Source: Reuters
As long as there is a need for Mainland Chinese to park their money and Hongkongers continue to
snap up apartments because these are deemed much more affordable than back home,
the property market in Vancouver
will probably stay "hot" for quite awhile yet.
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