From Global TV news item, ‘Mainland Chinese Buying West Vancouver’, 27 May 2011-
Narrator: “Properties in West Vancouver are attracting bidding wars these days, and selling for up to a half a million over the asking price, and, as with Richmond, the market is being driven by mainland China. March this year set an all time record for sales, up 57% over last year. But it’s only happening here, sales in neighbouring North Vancouver, and most of BC for that matter, are down.”
Jill Wiersma, Realtor: “Well, the last several months we’ve seen an incredible boom, largely driven by the Mainland Chinese. … Everytime we see a high-water mark of a new price, it seems to get beaten the next week.”
Narrator: “There’s hot and then there’s sizzling hot. This teardown property on Hayward avenue listed for $1.24M, there were more than 500 prospective buyers (90% Asian), there were 26 offers (22 Asian), the property sold for $1.57M.”
“There are cheaper properties elsewhere, but they are investing here because they see a better upside. They know there’s a lot more money in China looking for a place to invest, and as more of those buyers decide West Van’s the place, these prices should rise even further.”
A public conversation has commenced about possibly restricting off-shore speculators, and there may be place for some such limits. We still believe that this activity is but a sub-plot to our deep and pervasive local RE speculative mania story. It would be sensible to consider limiting speculative buying in general, something that has long been suggested in the blogosphere.
In this regard, we like many of the suggestions that jesse made recently [jesse at VREAA 27 May 2011, 6:29pm], about measures that could be taken to limit speculation:
1) Eliminating government-backed insurance of investor loans
2) Capping government backed insurance of owner-occupied loans and increasing deductible on all remaining government-backed insurance
3) Imposing larger capital reserve requirements for loans in regions where the price-income ratio is above the long-term average.
4) Allowing subdivision of wide lots and re-zoning for front/back duplex structures.
5) Increasing residential property tax rates
6) Charging surtax on unoccupied properties and enforce attempts to subvert it.
7) Enforcing secondary suite building codes
Note that jesse’s suggestions target speculative activity broadly, and that the ones likely to have the most effect (1-3) actually involve removing stimulus rather than imposing limits.
We would expect there to be very considerable vested interest resistance to any such measures. As Peter Ladner and David Berner agreed in the recent interview posted here: “The biggest industry in this city is real estate.” – vreaa