Buyers from China “dominate” the luxury segment of Vancouver’s red-hot housing market, according to new data from prominent B.C. real estate company Macdonald Realty Ltd., which says mainland Chinese buyers in 2014 accounted for 70 per cent of the firm’s transactions of high-end Vancouver homes over $3-million.
At the same time, however, Macdonald’s data show the influence of wealthy mainland Chinese buyers – a subject that stirs strong emotions here on the West Coast – declines in tandem with the price of the property. The firm said mainland Chinese buyers accounted for 21 per cent of the transactions last year in which homes sold for between $1-million and $3-million, and just 11 per cent of those in which the price tag dipped below $1-million.
The new data offer fresh granularity into Vancouver’s cosmopolitan housing market, where the average cost of a detached house has soared to $2.23-million, amid talk of a housing affordability crisis and rampant speculation about the possible role of buyers whose income is disconnected from the local labour market.
Although Vancouver has historically been shaped by immigration from Asia, particularly from Hong Kong in the years preceding the 1997 handover to China, there has been intense debate in Vancouver as house prices climbed in recent years. Many have said demand for high-end housing was boosted by tens of thousands of mainland Chinese millionaires arriving in Vancouver on provincial and federal immigrant-investor programs.
Dan Scarrow, a Macdonald vice-president who runs the firm’s Shanghai office, says buyers from China are having a clear impact on house prices – but only in the luxury market, and not on broader real estate prices, which have risen for other reasons. That creates a conundrum for those who are blaming foreign buyers alone for Vancouver’s affordability crisis, he says, but also contradicts those in the real estate industry who are trying to play down or entirely discount the role Chinese buyers play in the market.
“It’s absolutely had an impact on the top end, on the luxury market. But when you look at the rest of the market, [mainland Chinese buyers are] only participating at an 11-per-cent rate,” Mr. Scarrow says.
The data emerged from an analysis of 1,500 real estate transactions from Macdonald’s three main Vancouver offices over the course of 2014, Mr. Scarrow said. Apartments and attached houses accounted for 962 – or 62 per cent – of the 1,500 properties, while the remainder were detached houses. Almost all of the properties above $2-million were detached houses, Mr. Scarrow said, and the firm isolated buyers with ties to mainland Chinese by their names – which differ in spelling from Cantonese names from Hong Kong and those from Taiwan. The firm said these buyers “likely are Canadian citizens or have status as immigrants,” and mentioned that a “critical mass of around 50,000 high-net-worth mainland families” will continue to bring in money from Hong Kong and China to “invest in local real estate” over the coming years.
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