The role of so-called foreign buyers in B.C. real estate is statistically small. That’s according to new government data released today (July 7) that adds to what little is known about who is purchasing Vancouver properties and driving prices to record highs.
The period of analysis was short, consisting of just 19 days from June 10 to 29. But, speaking at a news conference in Victoria this morning (July 7), B.C. Finance Minister Mike de Jong described the information that the province collected from property-transfer tax forms as the most reliable data that’s been collected on the issue so far.
For the City of Vancouver, foreign nationals accounted for 4.1 percent of property sales. For Richmond, that number was 14.3 percent and for Burnaby it was 10.9 percent. For Surrey, it was 3.3 percent.
The percentage of home sales that went to foreign nationals across all of Metro Vancouver was 5.1 percent. For B.C., it was three percent.
The report notes that during just those 19 days analyzed, three percent amounts to $390 million in foreign money injected into B.C.
The data looked at 10,148 transactions. Of those, it found that 258, or 2.54 percent, went to Chinese citizens. Of foreign nationals, Americans came in second with 0.23 percent of purchases, and citizens of the United Kingdom came in third, with 0.10 percent.
The provincial government announced it would begin collecting the data in question during a speech de Jong delivered in the legislature last February.
“Beginning in the summer, individuals who purchase property will need to disclose if they are citizens or permanent residents of Canada, and, if they are not, their citizenship and country of residence,” he said.
Interest in who is buying homes in Vancouver has peaked as prices have skyrocketed.
According to the Real Estate Board of Greater Vancouver (REBGV), during the past three years the benchmark price for all residential properties in the region it describes as Greater Vancouver increased by 69.4 percent. As of June 2016, the benchmark price for a single-family detached home on the city’s East Side was $1.51 million. On the West side, the benchmark price was $3.55 million.
Frustrated with rising prices, it has become increasingly common for long-time residents to complain that foreign buyers and the incomes they earn abroad are the primary forces driving the market. Newspapers routinely state the assumption as fact with little information to support it. Columnists have even begun to call for measures as drastic as a moratorium on home sales for foreigner buyers.
“Vancouver housing market fuelled by Chinese buyers”, reads a November 2015 headline in the Globe and Mail. “Real estate developers shrug as flood of Chinese cash into Vancouver continues,” states a headline published one week later by the Vancouver Sun. More recently, a May 8 headline in the Province reads: “Chinese homebuyers crush dreams”.
It’s unlikely the data the provincial government released today will temper such rhetoric.
De Jong himself repeatedly stressed the information’s limitations and said more data needs to be collected before the government can take action in the form of new regulations or policies concerning real estate.
Skeptics were similarly quick to emphasize the data’s deficiencies.
David Eby, the B.C. NDP's critic for housing and MLA for Vancouver-Point Grey, argued that there are more reliable sources of information than property-transfer tax forms. He has scheduled a news conference for later today to discuss the matter further.
Others focused on the data's short collection period, how numbered companies and other entities can conceal a buyer's identity, and how bare trusts can be used to avoid scrutiny in property transactions.
Although the new numbers have obvious shortcomings, the province’s finding of 4.1 percent of City of Vancouver sales going to foreign nationals is in line with a number of previous estimates.
For example, a June 2015 report by the British Columbia Real Estate Association (BCREA) states that for Metro Vancouver, the available data suggests foreign buyers account for “no more than five percent of sales activity”.
A December 2015 report by the Canada Mortgage and Housing Corporation (CMHC) similarly states that 5.4 percent of City of Vancouver apartments went to foreign owners during the year preceding a fall survey of strata boards and property-management companies.
Surveys conducted by the Real Estate Board of Greater Vancouve (REBGV) have also repeatedly found real-estate agents reporting that between two and six percent of buyers are foreign.
There is also a March 2016 study commissioned by the City of Vancouver that found that single-family and duplex homes have a vacancy rate of just one percent, suggesting that foreigners living abroad are not buying homes and leaving them empty, as some reports have suggested.
Other studies have found evidence of foreign nationals possibly playing a larger role in the high-end luxury market of Vancouver real estate.
For example, a November 2015 study by UBC’s Andy Yan found that two-thirds of properties worth more than $1.25 million in three West Side neighbourhoods sold during one six-month period went to buyers with non-Anglicized Chinese names.
The same month, Jonathan Cooper, vice president of operations for MacDonald Realty, said he estimated that 70 percent of sales the company was involved in worth more than $3 million went to Chinese buyers. Cooper was, however, quick to emphasize that was an ethnic characterization that included long-time Vancouver residents and citizens of Canada.
Speaking today, de Jong stressed that while the province’s data relies on a small sample, it should not be dismissed.
“It is real, it is actual, it is factual, and it is beyond conjecture; it is beyond theories and speculation,” he said. “I attach importance to the data and we are going to approach it with an open mind.”