How many Vancouver buyers are foreign buyer?

By Andrew Peck, Managing Broker

We’ve been reading newspapers and hearing on the radio that many buyers from Asia are buying up Vancouver properties and causing prices to spike.

Given that Vancouver continues to receive so many awards for most livable city, this is understandable. But at Royal Pacific Realty Group, we wondered, is this true?

Now, a report has been released by the Urban Futures Institute that answers our question.

It’s based on data analyzed by Economist Ryan Berlin of the Urban Futures Institute. Here’s what he found.

First, Berlin also looked at the press stories, including a much reported talk that Mark Carney, Chair of the Bank of Canada, gave to the Vancouver Board of Trade. In this talk, Carney identified challenges that lie ahead for real estate markets, stating that in Vancouver

“…as in other globalized real estate markets like Sydney and Hong Kong—Asian wealth is pouring in as foreign investors diversify and look to invest in hard assets, thereby contributing to residential real estate valuations that are, in some cases, extreme.”

Second, Berlin looked at the lack of data on the role played by these foreign investors and decided to do locate data and do a thorough analysis.

He went to Landcor Data Corporation which provided him with data on recent sales in the Lower Mainland. These data, which include both MLS® and non-MLS® (for-sale-by-owner, pre-sales and exclusive listings), facilitated an empirical approach to addressing the role of foreign investment in the Lower Mainland’s residential real estate market.

How did Berlin identify how many foreign investors are buying Vancouver-area property?

The approach used to identify the extent of foreign investment relied on consideration of the addresses to which properties’ assessment notices were mailed by BC Assessment.

Data from Landcor indicate that there were 55,512 residential property sales in the Lower Mainland region in 2010. Of these, 40 per cent were detached units, 39 per cent were condo/apartments, 18 per cent were attached units, and the remaining three per cent included other residential properties and vacant residential land.

Of the 55,512 sales in 2010, a total of 195 residential properties were purchased by people outside of Canada (or had the assessment notice mailed outside of Canada).

Thus, foreign investors accounted for 0.4 percent of all sales in the region in 2010. Foreign investors played a slightly more prominent role in the condo/apartment segment of the market: 159 condo/apartments were purchased by foreign investors, accounting for 0.7 percent of all condo/apartment sales in 2010.
While representing a small share of sales for both structure types, it is interesting to note that condo/apartments accounted for 82 percent of all sales to foreign investors in 2010 (but again these sales to foreign investors represented under one percent of all condo/apartment sales).

The data for 2009 tell a similar story: sales to foreign investors represented 0.6 percent of all sales (360 of 63,226), and were concentrated in the condo/apartment segment of the market. The 299 condo/apartments purchased by foreign investors represented 1.1 percent of all condo/apartment sales in 2009, and 83 percent of all sales to foreign investors. It is also worth noting that foreign investors currently own a mere 0.5 percent of the total stock of 774,600 residential properties in the Lower Mainland.

Conclusion

Publicly available data do not support the anecdote that foreign investors are driving residential price increases in the Lower Mainland. Overall they accounted for 0.4 percent of all residential sales in the region in 2010.

Read the full report

To read the full report, Averages & Anecdotes: Deciphering Trends in Real Estate Prices, Part II: Foreign Investment by Andrew Ramlo, Economist, Urban Futures, click here.

What do other experts say?

Informal information from data collected – 300 to 500 responses received from a pool of 10,000 REATLROS® in surveys by the Real Estate Board of Greater Vancouver, suggest a more accurate figure would be 3 to 3.5 per cent of all buyers are foreign buyers.

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