There are some interesting changes occurring in China which may impact the Vancouver housing market. As reported in Business in Vancouver “the People’s Bank of China and the State Administration of Foreign Exchange (SAFE) began an aggressive intervention in the market to curb capital outflows. In January it was ruled that all buyers of foreign exchange must sign a pledge that they won’t use their $50,000 quotas for offshore property investment.”
Citizens of China may take $50,000 a year out of the country, but enforcing the regulation that the monies will not be use for foreign property investment has never been routinely enforced. Stricter penalties mean that people who do may be denied foreign currency access and be part of investigations for money laundering.
It is estimated that 35 billion dollars a year is spent on commercial property investment not including the purchase of overseas homes. Last August the B.C. government brought in a foreign buyer’s tax of 15 per cent.
The market has responded to these factors with house prices down 4 per cent and housing sales decreasing by 47 per cent. “Joe Zhou, of Jones Lang LaSalle property management head of research in China, has predicted a “big drop” in overseas purchases this year amid concerns over stricter and longer review procedures by the authorities as part of efforts to ease pressure on a depreciating yuan.”
Will this cool off individual investors buying single family homes for investment in Metro Vancouver?