ONE-THIRD OF ALL VANCOUVER HOMES SOLD IN 2015 ARE CHINESE
Nowadays, we see a lot more Canadian citizens who can’t afford to buy a house in their hometown because of its price, even while they are well-remunerated. This is the case of Kevin Oke, co-founder of LlamaZoo Interactive who left Vancouver for Victoria while earning a generous salary as a lead designer at a video company whose clients included Atari and Ubisoft Entertainment SA. Unfortunately, he is not the only one. Lots of young people are leaving Canada’s big cities because of the rise of the housing price. This move causes worries to these cities since it can struggle these places’ economies, especially in Vancouver and Toronto where the housing bubble is already getting bigger and bigger.
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CANADA’S REAL ESTATE MARKET: THE CHINESE EL DORADO
How can this phenomenon be explained? Why do the ones living there can’t afford to buy a house in their city? The explication is simple: Chinese investors are worried about the unstable situation of the Chinese Renminbi (RMB) and the declining economy, so their solution to preserve their savings is to send them abroad by investing in foreign real estate (Read also “Where Chinese buy overseas properties?”).
Why are they choosing Canada as a destination? The first reason for such an attraction for the Canadian market is because the country’s situation is considered good and safe. Canadian real estate market is comparable to the US one, and there has always been a migration move from Asia to the West coast of Canada. Since wealthy Chinese are investing in real estate there, the prices are still going up, attracting more and more investors and thus creating an important housing bubble. Some cities are entering a new technologic era such as Waterloo or Ontario, which also overheat the housing market.
To resume in some numbers:
- Benchmark price for a detached house in Vancouver is $1,293,700
- Benchmark price for an apartment is $456,600
- One third of all Vancouver real estate purchased in Vancouver in 2015 was bought by Chinese investors
- This represents about C$12.7 billion ($9.6 billion) spent in Western Canadian cities in 2015, over a total of C$38.5 billion total sales
- 66 per cent of detached homes in three west-side Vancouver neighborhoods within a six-month period were sold to buyers with non-Anglicized Chinese names
The bottom line here is that Chinese investors are willing to invest a lot where their money can be safe and fruitful. As a real estate promotor, it can be very interesting to demonstrate the advantages of investing in overseas housing.
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