Why Isn’t B.C. Cracking Down on Real Cause of Rising Home Prices?
China-watchers estimate (guesstimate?) that individual Chinese sent perhaps $1-trillion overseas in the past 12 months.
We’re not talking about private or public companies making investments, but well-to-do-Chinese who want some or most of their money somewhere else.
They think that their money can earn more elsewhere than in China. Or that it will be safe from the hands of the Chinese government. Or that they themselves might be caught up in corruption sweeps. Or they want to emigrate and send money abroad first. Or that they are uncertain about China’s political future and want to park money in places where the rule of law prevails, banking system is solid and political stability reigns.
By these criteria, Canada looks like a good spot, especially Vancouver, with its already large population of Chinese origin. Melbourne, Sydney, Los Angeles, San Francisco, London and a few other cities have felt the surge of Chinese money. But Vancouver (and Toronto) have been really targeted.
For reasons of absurd political correctness, it is considered in some quarters racist to mention that Chinese money has been buying up property everywhere in B.C.’s Lower Mainland. Where do people think it’s coming from? Azerbaijan? Indonesia? Australia?
The exact share Vancouver that has received of the estimated $1-trillion exodus of Chinese cash can’t be known. But housing prices have soared 30 per cent on average in the Lower Mainland in the past 18 months, and that surge didn’t just happen.
There was one factor that everybody knows and talks about. Lawyers from fancy Vancouver law firms go to China with brochures about expensive housing to be sold on the spot. Real estate agents play the market every which way, helping people flip houses and avoid taxes.
Houses and condominiums bought for inflated prices remain unoccupied. Housing inflation is on everyone’s lips, including companies and universities that have trouble attracting talent because would-be employees cannot find any reasonably priced housing.
Vancouver used to be a conversational interesting place. It has now become boring because only one subject dominates discussion: the housing market. Can I sell and make a killing? Can I downsize and have any money left? Will my children be able to live here?
A good question, since last week a report by Generation Squeeze said only 15 per cent of single-family homes, townhouses and condos in the Lower Mainland are valued at less than $500,000. And that share is probably dropping each year.
Housing will always be on the expensive side in the Lower Mainland. The mountains and the sea pinch the available land. British Columbia in most years attracts more people than those who leave, and most of the arrivals land in the Lower Mainland. This year, B.C.’s economic growth will lead the country, and Vancouver has become a modest international city with money and people moving through from abroad.
Pressures on housing the Lower Mainland are constants, but what has been happening recently has nothing do to with those constants. Something new has been distorting the market. Everyone knows what that new factor is, but no government seems able or willing to confront the problem.
Premier Christy Clark’s government has advanced some insufficient measures. The City of Vancouver predictably blames Victoria for not doing more. Victoria blames the federal government for indifference, since the Canada Revenue Agency could make more rigorous investigations.
Ms. Clark’s relative indifference to what is happening is strange, she being a self-styled populist. Politicians of the populist variety are supposed to have their fingers on the pulse of public concerns. She does not on this issue, and the New Democratic Party is making hay with her relative indifference.
Perhaps Ms. Clark thinks that this Chinese money is a vote of confidence for the province and her government. Perhaps she knows that those in the housing market for a long time consider themselves big winners from their windfall gains, and she doesn’t want to spoil their party.
Perhaps, given that her party gets so much money from local real estate developers, she’s reluctant to pluck their golden geese. Perhaps, as a free-market devotee, she doesn’t know what good any government intervention or policies would do, even when the market isn’t working. Perhaps she’s just stumped.
Her lack of interest on this matter is equal to her abdication of responsibility for Lower Mainland transit when she put a long-term transit plan to a plebiscite rather than having her government take charge. The plebiscite lost. So did the Vancouver area.