Canada's Condominium Magazine
Finally, we have hard data about how many Chinese have bought, or thought about buying, Canadian homes, and why. It turns out, as so often happens, that the popular perception is not quite right. Chinese homebuyers in Vancouver and Toronto are not all wealthy investors whose activities in the market have helped drive prices higher; rather, they are mostly families looking for a home in a city where their children can get a good education, and they are prepared to spend, on average, less than local buyers to acquire their homes.
These are some of the findings of a new report from a Chinese real estate company, Juwai.com, together with Sotheby’s International Realty Canada. The report, China to Canada: International Home Buyer Insights Report, was released today. It shows, based on Chinese home seekers’ enquiries on the Juwai web site, that education and personal use were the main reasons for their interest in buying in Canada. Investment was given as a reason by 27 per cent of enquirers for Toronto and Vancouver.
The notion that Chinese buyers are interested mainly in luxury property is also refuted. In fact, according to Juwai, two-thirds of enquiries for Toronto were for homes that fell below $655,050. The median price for Toronto enquiries was $458,928, significantly below the average cost of homes in this city. It suggests that most would-be buyers were looking at the condo market.
There were enquiries about luxury homes in Toronto, defined as those costing over $1 million, but a slight, 2 per cent increase in such enquiries did not translate into more sales, according to the report.
Chinese homebuyers have been credited as an influential segment of purchasers within the Canadian luxury real estate market; however, Juwai.com data dispels the notion that their interest is limited to the high-end segment. Property enquiry data from Juwai.com indicates: 57 per cent of Juwai.com property enquiries in Vancouver, 67 per cent in Calgary, and 68 per cent in both Toronto and Montreal fell below $655,050 in 2016. The median prices for Juwai.com property enquiries—$590,200 in Vancouver, $531,115 in Calgary, $458,928 in Toronto and $488,012 in Montreal—were within the range of, and in some cases, significantly below the average sale price of residential real estate within the market.
The Toronto Real Estate Board and Ipsos did their own research last year and found that just 4.9 per cent of residential real estate transactions in the GTA in 2016 involved foreign buyers.
The report also puts some numbers to the effect of Vancouver’s 15 per cent foreign buyers tax, imposed last summer. Enquiries on Juwai.com about Vancouver homes fell 81 per cent year-over-year in July 2016 when the tax was announced, and 78 per cent in August when it was implemented. A spillover effect caused enquiries about Toronto to drop 62 per cent in August and 72 per cent in September, though Toronto had no such tax. Interest rebounded in the fall of 2016, but there was no corresponding surge in real estate purchases.
The effect of the Vancouver tax on Toronto’s luxury market, in terms of enquiries from Chinese purchasers, was more dramatic. In the first two quarters of 2016, enquiries from China about $1 million-plus homes in Toronto shot up 144 per cent and 188 per cent compared to 2015. After the tax, third-quarter enquiries were up just 1.6 per cent. By the fourth quarter enquiries were up 18.4 per cent, but again, this did not translate into corresponding numbers of sales.
This is not to say that Chinese investment in Canadian real estate is unimportant. According to the National Bank of Canada, Chinese invest about $38 billion annually in Canadian property. Canada is the third most frequently enquired about destination by home seekers on Juwai.com, after the US and Australia. According to Brad Henderson, president and CEO of Sotheby’s International Realty Canada, Canadian cities are increasingly attractive as “lifestyle and financial oases” in a world beset by political and economic headwinds.