Chinese Investors Driving Up Metro Housing Prices

[ckkelley]

Originally Posted by whatnext

It never ceases to amaze me that people here will defend the right of foreign investors to drive up our real estate prices stratospherically, at the expense of those working and living here.

It's a shame that BIV doesn't allow non-subscribers to read their articles, but Peter Ladner's original column (which the realtor attempted to rebutt), featured a number of interesting facts and points:

- The one overseas owner who is holding 300 local residential properties.
- Stupidly high real estate price discourage businesses thinking of locating here.
- It makes for unsafe neighbourhoods (eg. a block with 5 empty houses)
- It sentences many of those working in the City to long commutes, there goes the beloved Livable Region Strategy
- It forces gov'ts into ham handed policies like the STIR program to try and preserve affordability.

Foreign ownership restrictions are the norm in many places in the world, its not radical and would help solve the problem.

Obviously it's easier to demand that 'someone do something about these high real estate prices' rather than listen to someone say "you're not doing enough to help yourself".

It's an attitude of entitlement that's going to make life-long renters out of some of the posters on this thread if they choose to continue to reside in Vancouver.

[ckkelley]

Originally Posted by whatnext

That's one argument, but it sure doesn't make for welcoming or successful neighbourhoods.

This is often the charge leveled at Coal Harbour (which I don't think is neccesarily true, perhaps..) and I think Coal Harbour is a very successful neighborhood.

[s211]

Originally Posted by logan5

Do you happen to know at approximately what height or density a tower in Vancouver ceases to become profitable?

If we're talking condos, I'd say it occurs when you have to add a high-rise elevator bank. IIRC, the city includes elevator shafts in FSR calculations. The additional shaft would eat into what could otherwise be usable area...

If we're talking rental, it's almost never profitable, even if you put land in your proforma at zero dollars.

[whatnext]

From today on Bloomberg:

China Home Buyers Make Vancouver Pricier Than NYC

http://www.bloomberg.com/news/2011-05-16...ke-vancouver-homes-pricier-than-nyc.html

[cc85]

Originally Posted by whatnext

From today on Bloomberg:

China Home Buyers Make Vancouver Pricier Than NYC

http://www.bloomberg.com/news/2011-05-16...ke-vancouver-homes-pricier-than-nyc.html

If this doesn't tell you that we are in a massive bubble then nothing will. Society is so sad.

[cornholio]

A good and related article, shouldent be a suprise to anyone I would hope. Like I have always said there are huge amounts of money flowing out of China and all this money needs to be stashed.

http://www.vancouversun.com/business/Opi...h+billion+says+report/5009270/story.html

Opinion: Corrupt Chinese officials flee with $120 billion, says report


By JONATHAN MANTHORPE, Vancouver Sun June 26, 2011

Read more: http://www.vancouversun.com/business/Opi...+report/5009270/story.html#ixzz1QTIekxSX

Estimates by China’s central bank that up to 18,000 corrupt officials have fled overseas with over $120 billion in stolen money in the last few years are undoubtedly well short of the truth.

The 68-page report by the People’s Bank of China, dated 2008 and marked “confidential,” was mistakenly posted on the bank’s website a week ago and has since been removed.

But the analysis which cites specific examples of how corrupt officials and Communist party members have, since the mid 1990s channelled their ill-gotten gains into countries like Canada, the United States and Australia in return for resident status or citizenship, has caused uproar among Chinese netizens.

There are reports of at least eight new websites coming on line in China last week to provide forums for people wanting to express their anger at this and all other petty corruption that dogs the daily lives of Chinese people.

The authors of the report recognized the inflammatory nature of their analysis, especially as the Communist party prepares to select next year the fifth generation of leaders since its 1949 seizing of power.

Corruption, says the report, “is a direct threat to the clean politics structure of the Communist party and harms the foundations of its power.”

The report says that for high-ranking party or government officials the U.S. is the favourite destination with Canada second and Australia third.

Lower-ranking officials without the same resources head for Thailand, Malaysia, Mongolia or Russia.

In many cases the stolen money is taken out through Hong Kong, where financial institutions have a long history and great expertise in moving money around the world out of sight of officialdom.

An earlier report from 2007 by the Chinese Academy of Social Science, the government’s main in-house think-tank, tabulated the number of fleeing corrupt officials by province. Guangdong, just over the border from Hong Kong, was well ahead of second place Fuchien on the southern coast opposite Taiwan.

The central bank’s report gives some specific examples of how corrupt officials operate.

It cites the case of a top politician, Cheng Kejie, who arranged for his mistress to live in Hong Kong and then transferred money to her.

In another case, Ministry of Finance official Xu Fangming simply placed large amounts of money in the bank account of his son studying abroad.

While there are examples of some officials leaving China with suitcases full of cash, laundering their loot through the casinos of Macau, or even using their credit cards to buy assets while abroad and then paying off the debts at home, most of the methods of money movement are far more sophisticated.

Most are disguised as business transactions between the enterprises run by officials in China and companies overseas. But often these overseas companies are fakes, set up by officials for the purposes of stealing and laundering money.

Another favourite scheme is not to repatriate profits made in overseas transactions and to sideline them into the personal foreign accounts of corrupt officials.

A 1999 report by the China Reform Foundation’s National Economic Institute estimated that about 52 per cent of customs declarations were falsified so as to mask the retention of stolen money in overseas accounts.

The same report produced figures on capital flight which suggest the latest estimate by the central bank of $123 billion between the mid-1990s and 2008 is well shy of the truth.

The National Economic Institute report reckoned that in 1998 alone $48 billion was slipped out of the country.

The report, by the institute’s director and noted economist Fan Gang, said that the technique of over-reporting imports and under-reporting exports was responsible alone for up to $20 billion a year in capital flight.

This raises the question why China’s wealthiest people and the country’s incipient middle class want to get their assets abroad and usually acquire another citizenship at the same time.

One is that there is no legal protection for private property in China, even for the best connected corrupt party cadres.

And the increased numbers in recent years in which wealthy Chinese are moving money abroad and getting second citizenships suggests a lack of faith in the strength of the country’s economy, or the future of the Communist party, or both.

Read more: http://www.vancouversun.com/business/Opi...+report/5009270/story.html#ixzz1QTHtFNud

[LeftCoaster]

Funny thing is if we can curb it's effect on Canadian property values this is actually great news for Canada!

[delboy]

Originally Posted by ckkelley

Obviously it's easier to demand that 'someone do something about these high real estate prices' rather than listen to someone say "you're not doing enough to help yourself".

It's an attitude of entitlement that's going to make life-long renters out of some of the posters on this thread if they choose to continue to reside in Vancouver.

But you are missing the point. Vancouver is not healthy if everyone ups and leaves. Cities need to be inclusive, at least to a point. Problem here is that it's a double whammy: lower wages and higher housing costs. Wages are comparable to Saskatoon not Toronto.

Plus from what I have seen of Canada, there aren't that many places that appeal to me. 6 months in Regina (oct to April) was enough to put me off a good portion of the nation...thanks very much. If it was just about getting a cheap house we'd all move to Moncton, NB.....

[Zassk]

Originally Posted by delboy

But you are missing the point. Vancouver is not healthy if everyone ups and leaves.

But that's nonsense, because clearly "everyone" is not upping and leaving. The opposite is happening. "Most" are coming or staying and "few" are leaving. Hence the price situation.

[delboy]

Originally Posted by Zassk

But that's nonsense, because clearly "everyone" is not upping and leaving. The opposite is happening. "Most" are coming or staying and "few" are leaving. Hence the price situation.

Never said that. The other poster suggested leaving if you can't hack it on the heels of some perceiving affordable housing as a right. I noted the folly in this and was suggesting that there is more to choosing a place beyond RE, otherwise I would have long left.

yes there is steady growth here. But where are they from and what are they contributing? Are droves of young people relocating to the city from across Canada? Do creative types move here to contribute to the city's urban fabric, how about head offices? I think we all know what the answers are.

Expensive real estate comes with growth and popularity, we get that, but the situation in Vancouver is much more than location, location....it's something more destructive and one would assume not sustainable.

[twoNeurons]

When you think about it, foreign investors from China would make the best bogeymen ever.

• There's nothing we can do about their wealth. (No control)
• There's nothing we can do about wealth buying property here. (again, no control)
• We can't blame anyone in this country.
• They speak an incomprehensible language.
• They even use pictures for words, so it's even harder to understand them.
• They have a strong sense of national pride (they are clearly just using us)
• They walk among us and we can't tell which ones are against us.
• They come from a government that is seemingly opposite.
• They (obviously) must have all got their money by fraudulent means, so they're practically criminals.
• Since they can't be stopped, what other option is there but to try to compete and BUY WHILE YOU STILL CAN OR BE PRICED OUT FOREVER!!!

It's not that I'm saying there aren't any Chinese investors buying up condos like a squirrel stocks nuts... it's just that if I were to pick a group of people to blame for high prices and I had a vested interest in keeping the prices going up, foreign Chinese investors would be my choice to blame as well.

In case anyone failed to notice... that list is highly sarcastic and tongue in cheek.

[trofirhen]

Originally Posted by LeftCoaster

Funny thing is if we can curb it's effect on Canadian property values this is actually great news for Canada!

Out of sheer curiosity, how so? Could you elaborate a bit? Your conclusion is interesting, but I don't exactly understand ... (not that that's surprising in my case; nevertheless ...)

[WarrenC12]

Originally Posted by twoNeurons

It's not that I'm saying there aren't any Chinese investors buying up condos like a squirrel stocks nuts... it's just that if I were to pick a group of people to blame for high prices and I had a vested interest in keeping the prices going up, foreign Chinese investors would be my choice to blame as well.

In case anyone failed to notice... that list is highly sarcastic and tongue in cheek.

Bill Vanderzalm already did that in the 80s and created the PTT to tax the Asian monster (specifically Hong Kong at the time).

[LeftCoaster]

Originally Posted by trofirhen

Out of sheer curiosity, how so? Could you elaborate a bit? Your conclusion is interesting, but I don't exactly understand ... (not that that's surprising in my case; nevertheless ...)

Nothing too complex really, simply Chinese "criminals" smuggling money into Canada injects that money into the Canadian economy and in a rather round about way contributes to Canada's GDP. That money will be spent at Canadian retailers, held in Canada's financial institutions and invested in Canadian equities.

In a weird way it makes part of the Chinese economy function as though it is a part of Canada's. Kinda nice really.

[duener]

The Feds just greatly reduced the number of applications accepted to the investor immigration program:
http://www.marketwire.com/press-release/...reduce-backlogs-improve-wait-1531237.htm

I imagine this could have a major impact on Vancouver real estate once people realize that there might not be an endless stream of "investors" from China coming in any more.

The whole situation has been embarrassing for Ottawa (Canadian debt levels keep going up) and Beijing (wealth is being stolen from the hard working peasants). Maybe they've talked to each other and decided put an end to it all.

[ssiguy]

VERY interesting new weekly stat out for the city of Vancouver.
For the week ending July 10 which is the first full week of the new immigration restrictions on the land speculators prices are down 8% for attached and SFH are down a whopping 13%!
Things go up and down but that is a hell of a plunge in just week and it's very interesting that this is the first stat post immigration restriction. If this continues into next week or two the official Vancouver housing crash will have begun.

[mr.sandbag]

when it drops 13% below the starting price of the average home before the influx of wealthy asian buyers, then yes maybe we might be seeing bubble burst and I will worry, but it if returns to the prices before the influx, then its just a correction to the spike and nothng more... prices move up, then we see a slight correction, they stablize and then move up again... and so...

we need to (imho - at least 3 of the following) see pop growth halt or reverse, asain buyers taking thier money elsewhere, interest rates go up, the openning of ALR to housing and developers to flood the market with new housing to see a serious correction to the housing prices in the metro. I just cannot see that happenning in the near future

[ssiguy]

It is essential for the future prosperity of the city and province that real estate prices drop ATLEAST 30%. Word is out to the rest of the country that Vancouver has become a resort for the wealthy only and the population stats prove this. In the last quarter BC had a net LOSS of migration from the rest of the country for the first time in a decade.
This is very bad news as not only are others not coming but the young are leaving. The young are the most mobile and they realize that even if they can manage to get a decent paying job in Vancouver, and almost anywhere in BC for that matter, is still a one ticket to poverty and debt slavery and low standard of living.
BC already has wage levels and productivity rates well below the national average and a shortage of skilled labour and all this "best place on earth" crap doesn't change the fact that they can't afford to live here.
Someone making 60K a year still doesn't even qualify for a dump of a bachelor condo is a far flung dumpy suburban area while in the rest of the country it affords someone a good standard of living.
As for the wealthy coming here to drop off the kids and still work/live somewhere else is a net drain on the economy. They don't pay any income tax here but their kids still get free healthcare and education. All they pay for is property tax, which any native BCer would have to pay for anyway, and it doesn't come remotely close to pay for the services they enjoy from municple services and health and education they enjoy.
As for this stuff about local Chinese the reason behind the high prices, I don't consider anyone only here 5 years being "local" but rather just speculators being here a bit longer.
BC real estate must get back to some form of affordability the province will continue to lose it's skilled workers and businesses that may want to come to the province or expand their business but the high real estate prices prohibit both.

[squeezied]

Originally Posted by ssiguy

As for the wealthy coming here to drop off the kids and still work/live somewhere else is a net drain on the economy. They don't pay any income tax here but their kids still get free healthcare and education. All they pay for is property tax, which any native BCer would have to pay for anyway, and it doesn't come remotely close to pay for the services they enjoy from municple services and health and education they enjoy.

I don't think education is free for international students.

[s211]

Originally Posted by ssiguy

VERY interesting new weekly stat out for the city of Vancouver.
For the week ending July 10 which is the first full week of the new immigration restrictions on the land speculators prices are down 8% for attached and SFH are down a whopping 13%!
Things go up and down but that is a hell of a plunge in just week and it's very interesting that this is the first stat post immigration restriction. If this continues into next week or two the official Vancouver housing crash will have begun.

Source please.