Vancouver real estate

Foreign Purchases of BC Real Estate Falls 31% in 2018

Steve Saretsky -

With many global property markets slowing due to a tightening of global liquidity and Chinese capital flight, many home sellers and property developers remain eagerly optimistic the Chinese Lunar New Year would provide a much needed bear market rally. However, if recent spending habits in China are any indication, this New Year is likely to come and pass with disappointment.

According to Beijing media group; Caixin, Lunar New Year spending in China failed to meet expectations. While spending technically increased to 8.5%, it was indeed the slowest rate of growth since 2011. Earlier today, the South China Morning Post reported New homes sales declined by 56% year on year in 17 major mainland China cities, including Shanghai and Nanjing, during the Lunar New Year holiday.

From a broader 30 city view, which includes re-sales, the three month moving average of home sales in China’s tier 1 and tier 2 cities remains firmly in negative territory. While Positive sales growth and prices are still being recorded in tier 3 cities.

According to the Chinese National Bureau of Statistics, land transactions fell 29% in January, the largest decline since May 2015. This has prompted various rounds of monetary stimulus, with the head of the Chinese Ministry of Finance Treasury Department suggesting quantitative easing could soon be considered a viable policy option.

The knock-on effects of a slowing Chinese economy, tight capital controls and a barrage of taxes and money laundering investigations has particularly impacted the Greater Vancouver and BC provincial housing market. In 2018, total sales volumes in BC fell 24.2%. While foreign buyers reduced their spending to $2.545B on residential real estate in 2018, down 31% from a year earlier.

That sum nearly totals recent estimates suggesting dirty money totalling as much as $2 billion in one year flowed into B.C.’s legal and illegal casinos and luxury real estate market.

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The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

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The Saretsky Report. December 2022