Foreign nationals, mainly Chinese, bought 5.1 per cent of the homes sold in Metro Vancouver in a three-week period of June, according to the first release by the B.C. government of data on the impact of offshore real estate investment.
Speculation has swirled for years about the effect of offshore buyers, particularly from China, but the province only began tracking the citizenship of home buyers in June.
Buyers are now required to declare on their property tax transfer form if they are Canadian citizens or permanent residents, or else provide their country of citizenship.
Of the 5,118 property transactions in Metro from June 10-29, there were 260 deals with foreign buyers and 234 of those or 4.6 per cent declared Chinese citizenship.
No other country accounted for more than 0.1 per cent of transactions, and Korea, Taiwan, India and Romania were the next highest sources.
A total of 337 purchases by foreign nationals were made province-wide.
Finance Minister Mike de Jong noted the average purchase price paid by foreign buyers was significantly higher at $1.1 million, compared to $735,000 for the average Canadian citizen or permanent resident.
As a result, the homes bought by foreign nationals accounted for 6.5 per cent of the Metro Vancouver total by value, or $350 million worth of property.
In Surrey, foreign transactions made up three per cent of the total but accounted for five per cent of the value of homes sold.
Foreign purchases were most prevalent in Richmond, where they made up 14 per cent of the total counted, followed by 11 per cent in Burnaby and four per cent in Vancouver.
De Jong said he doesn’t want to draw major conclusions until more data comes in, but said the province will finally have real evidence to base policy on.
“It is actual, it is factual and it is beyond conjecture,” de Jong said. “It is beyond theories and speculation. I attach importance to the data and we’re going to approach it with an open mind.”
RELATEDVancouver’s real estate tale poised to end badly: SFU profCooling off period urged to protect hasty home buyers after use of home inspections plungesVancouver rental market too pricey for young workers: reportVancouver luxury real estate sales soared in first half of 2016
The province also released statistics showing 108,000 new housing units are at various stages of development within six Metro Vancouver cities.
They include 30,000 in Burnaby, 25,500 in Vancouver, 20,000 in Surrey, 16,500 in Richmond, 10,500 in New Westminster and 5,500 in Coquitlam.
“In the purchase market and the rental market there is a vast number of housing projects on the books that if they were approved would begin to ease considerably some of that pressure,” de Jong said.
De Jong also noted the province’s budget move to expand the exemption for lower priced homes from the property transfer tax is being used – an average of 27 families a day are buying PTT-exempt homes.
The finance minister also said demand for housing in B.C. is being driven by the fact more people want to come to this province than any other, and because B.C.’s economy is strong, leading Canada in job creation.
“It is a challenge virtually every other jurisdiction would like to have because it is a challenge associated with a growing economy,” de Jong said, adding that doesn’t detract from the “frustration” B.C. families feel that can’t find a place to rent or a home they can afford where they want to live.
NDP leader John Horgan said the real level of foreign activity is likely considerably higher because the government’s statistics rely on self-reporting by buyers, and fail to include property purchases made through numbered companies or trusts.
Even taking the data at face value, Horgan said, it means Lower Mainland residents were “squeezed out” of $20 million a day worth of property or nearly $400 million over the 19-day period measured.
“It’s outrageous and it has to stop,” Horgan said, denouncing de Jong’s response.
“We should be the envy of the world because of our ridiculous housing prices? That’s absurd.
“British Columbians are not happy about this problem.”
The NDP has previously proposed a speculation tax, similar to one floated by UBC economists.
Horgan wouldn’t say exactly where he thinks Lower Mainland home prices should end up, but said the government must suppress the exponential growth of house prices that have left a growing gap compared to what average residents can afford.