Steve Saretsky -

The Coronavirus outbreak, with more than 2100 positive cases and growing, could not have been more ill-timed, given the official commencement of Lunar New Year this past weekend. The annual holiday typically results in an uptick in economic activity, when around three billion travellers crisscross China over the 15-day period that’s known as the world’s largest annual human migration.

With Chinese officials taking drastic measures, including, ordering all travel agencies to suspend sales of domestic and international tours, it could send shockwaves across the globe. On Saturday, the first day of Lunar New Year, Chinese transportation dropped by 28.8% from the same day last year, while railway transportation fell by 41.5%, roads 25%, and passenger flights by 41.6%.

Chinese tourists, the biggest source of outbound travellers worldwide, spent $130 billion overseas in 2018. Chinese tourists are also the world’s biggest spenders on luxury goods, snapping up everything from fancy watches and handbags to Vancouver condos on overseas trips.

Indeed, the local impact on cities such as Vancouver could prove challenging, especially for some luxury condo projects hoping to cash in on a wave of buyers this time of year. Vancouver Developers have been ramping up advertising, promoting a bevy of incentives and discounts for Lunar New Year shoppers.

Chinese New Year is typically viewed as an opportune time to clear existing inventories. However, new home sales could prove disappointing this year with many Chinese buyers grounded. Pre-sales in the city of Vancouver have been on a steady decline since peaking with Chinese capital flight in 2015/2016.

Vancouver new home sales by year
New home sales by year in the city of Vancouver.

China will extend the current Lunar New Year Holiday for an unspecified period of time to help reduce the spread of the coronavirus that has killed at least 56 people in the country and continues to trigger new infections around the globe.

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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