Following a steep drop-off in Metro Vancouver homes searches by potential buyers in China, interest spiked again in 2018’s third quarter, according to data mined for Glacier Media by China's biggest international real estate website Juwai.com.
The number of inquiries on Metro Vancouver real estate between July and September exceeded even the height reached in 2017’s first quarter, the international property portal reported in response to an inquiry by Glacier Media (see graph above).
This follows a significant lull over the previous four quarters, where Chinese interest dropped dramatically and focused on other Canadian cities, especially Montréal. Metro Vancouver has this year slipped to being the fifth most searched-for city for Chinese buyers, after Greater Toronto, Montréal, Calgary and Ottawa – whereas in 2016 it was second only to Toronto, reported the website.
Carrie Law, CEO and director of Juwai.com, said: “Our inquiry data shows that Chinese demand plummeted during the first half of the year. This matches the official data showing that foreign buying in Greater Vancouver was down to just one per cent of activity in the first half of 2017. In the second quarter, Chinese buyer demand actually hit its lowest level since early 2015. It’s like a sinkhole opened up and swallowed all the buyers. That was the result of several quarters of plunging demand.”
A dramatic increase in inquiries turned this around in the third quarter, with searches up 130.8 per cent from the trough seen in Q2, and up 30.4 per cent over the third quarter of 2017.
Law said, “This is an upswelling of demand that we frankly didn’t expect. What we can’t tell you yet is how many of these buyers will go all the way and acquire a home, despite the foreign buyer tax. Given the time it takes to research and complete a transaction, those who do purchase should begin to show up in the official statistics only from the first quarter of 2019.”
Metro Vancouver still good value for Chinese buyers
So what could be prompting this renewed interest in Metro Vancouver real estate by Chinese buyers?
“While more expensive than alternatives like Montreal, Vancouver is still offers Chinese the prospect of homes or apartments at a relatively low price compared to similar property in China. The price per square metre for an apartment in downtown Vancouver is 37 per cent lower than in Shanghai, according to Numbeo,” Law wrote in a statement to Glacier Media.
“In China right now there’s a great deal of insecurity about the real estate and economic outlook. Most middle-class and upper-middle-class Chinese owe much of their financial security to their homes and investment properties in China, which have appreciated massively over the past two decades. But determined government policy seems to be bringing an end to price appreciation and could even cause prices to fall for the first time. In addition, political changes, the trade war, and the falling currency combine to make Chinese very nervous about their personal finances.”
Low average inquiry price
Common public perception is that Chinese buyers seek out high-priced properties to invest huge sums of cash, but this is not borne out by Juwai.com’s data. The website reported that the average inquiry price for Chinese buyers in Metro Vancouver area in 2018 so far is $831,000.
Juwai.com also said that Canada is the fourth most popular country in the world for Chinese buyers.