More speculation on exactly what (or who) is driving Vancouver's house prices

For those desperate for hard data on the effect of Chinese buyers in the Vancouver housing market, answers seemed to come from the most unlikely of sources – China's state run newspaper.

The China Daily ran a story – as I reported in my Blog on Friday – which said that "according to Colliers International, a real estate service provider, the proportion of Chinese buyers in Vancouver's property market is on the rise. At the end of the first quarter this year, it increased to 29 per cent of all home buyers."

The buying is attributed to a desire to move money out of the country, preferably into hard assets, as China restricts home ownership in the country in a bid to cool the market.

This all matters because market watchers are increasingly anxious about the state of Vancouver's real estate industry, with recent reports suggesting it is now the third most expensive in North America.

Some are calling for restrictions on foreign investment – without knowing how much money is actually coming into the city.

But alas, nothing is so transparent in a market such as Vancouver, which doesn't actually track foreign investment. The Colliers report believed to be at the heart of the article – Marketshare First Quarter 2011 – doesn't actually quantify the number of buyers and goes out of its way to play down the effect they may be having.

"There seems to be more myths than facts about Mainland Chinese investing," Colliers president Greg Ashley wrote in the intro.

"This trend is certainly impacting single family housing values in Vancouver West Side and Richmond. However, it is not the driving force behind all sales. A number of recent launches reported large numbers of Asian buyers -- yet a significant portion of these buyers are actually local residents not foreigners."

The report also mentions the Chinese, but not investors. Instead, it points out that many immigrants have decided to live in the city to take advantage of business relationships and the school system – quite a different scenario than investors buying up expensive properties and leaving them vacant.

Unlike some countries, Canada doesn't track foreign investment in real estate. That leaves the private sector to fill the gap, and methodologies vary wildly. Colliers used Urban Analytics Inc. to gather its data, a company that relies on site visits and staff interviews to get an idea of what's happening in the market.

Source: Steve Ladurantaye, Globe and Mail


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