More Demand For Real Estate in Vancouver For 2016
Chinese stock markets opened 2016 with four straight days of losses, several of which were so dramatic that a “circuit-breaker” was triggered when the main index dropped more than seven per cent.
On Thursday, Beijing also further devalued the renminbi against the U.S. dollar by 0.51 per cent, which added to the extended sell-off, Holt said.
“When you are a saver in China and you see that your government is trying to make exports more competitive and creating more balance in the economy, it’s natural for you to say, ‘Oh my God, I need to get my savings out and protect my family,’ ” he said. “And I think it’s that rush for the exits, the large pickups in capital flows out of China, that’s indicative of what’s happening.”
Holt noted that Chinese investors will likely look to the U.S. dollar as a main investment instrument, but he noted the Canadian dollar’s persistent weakness has also made real estate in Vancouver more attractive.
“Canadian real estate … because our own currency has depreciated so much … that has put Canadian assets on sale from the vantage point of, say, Asian investors,” Holt said. “If we judge Vancouver and Toronto in that context, it’s not cheap for us here in Canada … but in the context of other Pacific Rim cities like San Francisco or Singapore, and given our currency depreciation and what you can buy cashing in on foreign currencies, we look pretty cheap right now.”
TD Economics senior economist Leslie Preston said it is difficult to say if the market panic will lead to more Chinese money coming to Canada, given the lack of data tracking the exact impact of Asian buyers on B.C.’s housing prices. But she said the upheaval has already hit Canada, noting that the TSX has dropped about five per cent this week because of events in China and falling oil prices.
“I think we’ve already seen it spill over to equity markets elsewhere in the world,” Preston said. “We’ve seen oil head lower this week, which is very important for Canadian equity. So to that extent, we’ve already seen it in the Canadian markets.”