07 October 2017 0 Comments Posted By : DOUGLUS TODD

Douglas Todd: Is China bursting Vancouver’s housing bubble?

The author of Millionaire Migrants was one the first to provide evidence that the foreign real-estate dreams of China’s wealthy have arguably had more impact than anything on Metro Vancouver’s housing unaffordability.

UBC geographer David Ley, along with SFU’s Wu Qiyan, told me early this year the city’s real-estate bubble would be punctured when leaders of the People’s Republic of China further restrict money leaving their country.

Now strong signs are appearing that Metro Vancouver’s real-estate balloon has indeed been pricked by China’s heightened capital controls.

Demand for multi-million dollar dwellings in Metro Vancouver is falling. “All the high-end stuff is sluggish,” says Vancouver realtor-analyst Steve Saretsky.

Sales volumes and prices on detached houses are especially dropping on the west side of Vancouver, in Richmond and in West Vancouver, where Mainland Chinese buyers had been active buying and building mansions.

Real Estate Association of Greater Vancouver figures show the median price of a detached home is down more than $500,000 since February, to $1.7 million.

(The declining demand for detached homes counters a run on small condos in Metro Vancouver. Saretsky believes condo purchases are not as tied to Mainland Chinese investors, while others nevertheless cite high Asian pre-sales.)

Veteran Canadian real-estate data analyst Stephen Punwasi also has little doubt “Chinese capital is having a tougher time getting out of China” since leaders introduced tighter controls in January.

“Vancouver locals selling $3 million bungalows are going to have trouble finding an alternative to foreign urban land buyers, so prices need to be slashed,” Punwasi said.

The co-founder of Better Dwelling, which specializes in housing data, said the volume of “hot money” leaving China in August has plummeted almost 40 per cent compared to August last year, to roughly $46 billion US. This is the kind of cash that typically goes into foreign real estate.

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