Time for your weekly brief on the most important real estate stories.
More than 1.3 million homes are left empty in Canada. Either totally vacant, or just occasionally occupied by someone with a primary residence in another country. This represents 8.7% of homes across Canada. This either means the country is now a touch and go country for a lot of people that don’t really live here, or there’s a ton of underused housing. To contrast, the US rate of vacancy has only ever reached an all-time high of 2.9%.
The first set of foreign buying numbers were released by the province of Ontario. The Golden Horseshoe region, which is Toronto and the economic region surrounding it, had 4.7% of real estate purchases made by foreign buyers. This number is significantly lighter than most had anticipated.
Toronto real estate makes a sharp turn. Price growth is slowing, sales are dropping, and inventory is hitting highs. June ended with 19,680 active listings, hitting a multi-year high for inventory. This excludes the 10,000+ estimated listings that were terminated before month end. This is the first month after new cooling measures were announced, so we’ll wait to see how the market adjusts over the next few months before making any conclusions about what this means.
Vancouver real estate continued to defy gravity, with prices soaring in the month of June. Real Estate Board of Greater Vancouver numbers show the benchmark price of composite homes rose 1.8% from the month before. 1.8% doesn’t sound all that bad, until you realize that works out to $1,006 per day. At that rate, a home earns roughly 4.5x as much in value than the median family would in income. We’ll let you decide what that means.
Domestic real estate investment in China is dropping, and government cooling measures are expected to flood inventory soon. The square footage of real estate sold was 35% below the ten year average. To complicate things even further, the government is accelerating development approvals, and even imposing maximum sales prices and mandatory lock-ups preventing short-term flipping in some developments.
Don’t expect Mainland Chinese real estate investors to make it rain in 2017. At least, not to the extent they did last year. International investment is expected to decline 21.1% from the segment, as capital controls take their tolls on the ability for capital to leave the country. The roughly US$80 billion in investment is nothing to sneeze at, but more than half of that is estimated for the US market alone.
Foreign exchange reserves in China continued to build, making that the fifth month in a row. Even more interesting was a speech made by an executive at the Chinese central bank, that revealed a new anti-money laundering framework that they believe will be the strictest in the world. They also casually mentioned that they’ve trained over 400,000 people to help roll out the framework, so they aren’t exactly messing around. This is expected to further slow real estate investment from Mainland Chinese investors, as regular people find it more difficult to get money out of the country.