Only three per cent of the residential housing sales in a three-week period in June were to foreign investors, the bulk of whom were from China, according to new survey data released by the Ministry of Finance.
The data was released the same day an Asia Real Estate Association of America (AREAA) conference was taking place in Vancouver, where the findings were greeted with ridicule and laughter.
“I would like to know where the B.C. government is getting their statistics,” said Michael North of the Asia Pacific Network Foundation. He estimates the number of foreign buyers investing in Vancouver real estate at 10%, not 3%. Others at the conference put the numbers even higher than that.
The government's data comes from property tax transfers. In June, it began requiring proof of citizenship on all property tax transfer forms.
Data released July 7 is but a snapshot, and a small one at that. It covers all residential home sales between June 10 and 29.
“That is a very limited period,” said Finance Minister Mike de Jong. “There is a very healthy sample size, but chronologically it is not even a month. It is barely three weeks. So in terms of drawing absolute conclusions about what is taking place in the market, I offer that caution.”
There were 10,148 transactions between June 10 and 29 throughout B.C., half of which were in the Lower Mainland. Only 337 of those sales – 3.3% – involved foreign nationals. So, about 97% of home sales in that three-week period involved either Canadian citizens or permanent residents.
The bulk of the foreign buyers were from China: 258, or 2.5%. The second largest source of foreign investment was the U.S., which constituted just 0.23% of sales to foreign nationals.
But those foreign buyers, in general, paid a lot more for the homes they bought. Of those sales involving foreign nationals, 77% were concentrated in the Lower Mainland.
The average value of investments in the June transaction for Canadian citizens and permanent residents was $735,000. The average investment for foreign nationals was $1,157,000.
The government's data suggests foreign investment may not be as significant a factor in inflating Vancouver residential real estate prices as many people have assumed.
But real estate agents and developers attending the AREAA conference immediately questioned the government's numbers.
“I would say 50% of house buyers, maybe 60% [are foreigners],” said Eve Chuang of Macdonald Realty.
Chuang, and other agents at the AREAA conference, said it is not the nationality of the buyer but the source of the capital that is important. Money from China can be simply transferred to a relative with an address in Vancouver, who then acts as the buyer, the real estate agents explained.
“Name the company Maple Leaf Enterprise and hire Joan Smith to head it," North said. "Suddenly you’re a Canadian investor."
– With files from Frank O'Brien, Western Investor