Amidst an ongoing debate as to the influence of foreign money in the Vancouver housing market, CMHC has attempted to shed some light on this debacle through their latest report. Using an infusion of taxpayer dollars to begin collecting more measurable data, including Canadian tax and property info, CMHC was able to determine the proportion of non-resident ownership, and non-resident participation (owning a portion of real estate) within the housing market.
As per CMHC, the number of properties that have at least one non-resident owner amounted to 6.2% in British Columbia and 7.6% in Vancouver, the highest of all the areas surveyed.
Non-ownership is more heavily concentrated in the condo segment. Non-resident ownership in Vancouver condos sits at 11.2%, nearly double that of the single family housing market.
Further, non-residents remain enamoured in the new construction space where they have a 19.2% ownership rate of condos constructed between 2016-2017. This suggests the pre-sale condo space has become increasingly dependant on foreign capital flows, particularly from China.
Thus, the vulnerabilities in the pre-sale space remain elevated considering Chinese capital outflows have hit a brick wall while simultaneously any outflows have been discouraged from investing into the Vancouver property market following a barrage of punitive taxes.
Therefor it shouldn’t be overly surprising to see the pre-sale absorption rate for new condos slipping to 15% in February, down from a high of 94% last January. Housing starts will drop further as developers de-risk and or fail to meet sales targets in order to secure construction financing.