Tag: Vancouver real estate

Speculation is on the rise that the B.C. Liberal Government will likely take blame for falling house prices in the next year, a report says.

The report, which was conducted by Capital Economics, states that the likelihood of the blame falling on the Liberals’ decision to impose a foreign buyer tax on the housing market is high, despite the fact that the trend in Vancouver’s housing market began to change well before the foreign buyer tax took effect. The report expects to see house price growth around, or possible below, zero percent by May of 2017. The B.C. government will likely take the brunt of the blame for this.

August 2016 is so far showing a great decline in housing purchases. In Greater Vancouver, home sales were down for the first two weeks of August by 85 percent when compared to the same two-week period of 2015. In West Vancouver specifically, home sales were down by 94 percent – a total of three home sales in the first half of August 2016. For reference, there were 52 sales in the first half of August 2015.

Much of this decline in home sales comes from the higher end of the market where the top-market homes have been taking considerably longer to sell. In the lower-range housing market, home sales continue to be sold quicker than previously. In addition, the lower average selling price that has been documented in recent months might not be an indication of the market declining as a whole; it could be an indicator only of the types and prices of home sales.

In British Columbia, real estate and construction of homes account for more than a quarter of the province’s economy. The slowdown in housing sales raises some concern for a great decline in the economy of B.C. While this comes at the same time as the new foreign tax, experts say that the downturn began well before the crackdown on foreign buyers. West Vancouver home sales, for instance, fell by 38 percent in June, whereas the new tax was not introduced until the end of July.

Do you think there will be a downturn in our economy? Will the Liberals take the blame?

Please tell us what you think!

Capital Economics published a letter earlier this month explaining their distaste for the notion that foreign buying is Vancouver’s real problem, blaming politicians for using this as a “blame game”, and one that they have seen time and time again.  The letter offers a handful of alternative ideas, and some food for thought.

According to the letter, Vancouver actually had a relatively low percent of foreign purchases when compared to other similar metros: Florida had 22 percent foreign purchases in 2015, and 16 percent in California – Vancouver only had 10 percent. The letter notes that price increases only went up by 7 percent last year in Miami, and 10 percent in San Francisco.

Capital Economics states that they believe the housing problem is instead caused by low interest rates and irresponsible lending in Vancouver and surrounding areas. The report does acknowledge that the low Canadian dollar has made Vancouver a more viable option for foreign purchase, and therefore doesn’t disregard the idea completely – but it rejects the notion that foreign purchase is the sole proprietor for the current housing bubble.

When looking at loan-to-income ratios in Vancouver, the report found that nearly 33 percent of insured mortgages had a ratio of more than 450 percent. In the past 12 months we have seen a further decline in interest rates, and therefore lending standards being relaxed even further. The report states that this, not foreign purchasing, is the issue at hand.

The letter expresses concern for the future of Vancouver’s economy, stating that if the new 15 percent tax on foreign purchasers scares those purchasers away from Vancouver, a significant drop in the real estate market could lead to a massive impact on the economy.

Let us know your thoughts in the comments below.

It’s a topic we know all too much about right now: foreign investment in the real estate market – especially with Chinese purchasers. However, the scene in Australia is a little different from the one in Vancouver.

Chinese investment in Australia’s housing market has quadrupled from 2013 to 2015: soaring to $24.3 billion from $5.9 billion.  Chinese buyers are dominating the housing auctions in suburban Australia – and in many such auctions it has become increasingly rare to see bidders of other nationalities.

However, it is not just offshore investors who are dominating the market. Australian real estate companies claim that the largest percentage of Chinese buyers whom attend their auctions are either Australian citizens or permanent residents.

In these house auctions, it’s common for the incredibly bidding-savvy Chinese buyers to do well. The bids all come down to readiness; how much homework you have done; and how much heart you put into the bid, according to one auction-style home purchaser. He recommends not to bother bidding near the beginning of the auction, so as to not “waste breath.” He claims you will know who you are really bidding against near the finish line.

Another bidder, one of dozens on the four bedroom house that ended up selling for $1.8 million, was hoping to move his growing family out of their cramped apartment. He, like many of the bidders, has been searching for a home for well over two months – but it all comes down to who wants it the most with an auction-style market.

What do you think about buying a house in an auction? Would it make the process easier or more difficult? We are curious to know your opinions!