There is constant buzz among media outlets worldwide around the amount and effects of foreign investment on the Canadian real estate market. The question is, is it all true? Not necessarily.
While the annual number of foreign investors is nominal (less than 5% of all Real Estate transactions in BC happen with foreign investors source: BCREA), it has always been one of the favorite topics to debate throughout the city. Our stance is: “don’t believe everything you hear.”
So let’s clear up three of the biggest myths around the topic.
Myth #1. Only Asians invest in Canadian real estate. While Asian investment makes up a portion of this investor group, there has been increased buying interest from other countries such as the United States, especially with the difference in currency values.
Myth #2. Foreign buyers are the reason why there is no affordable product in Metro Vancouver. Actually in more suburban market areas such as Surrey, Langley and Maple Ridge only selective and modest price appreciation has occurred since the recession in 2008. This, combined with lots of supply and low interest rates, makes it possible for a first-time buyer to get the product they want at an affordable price compared to Vancouver Downtown and Vancouver West.
Myth #3. Foreign buyers are all “flippers” looking for a quick return on their real estate investments. Asian investors and other foreign buyers typically have a longer investment horizon than “local” investors; thus, holding their properties for longer (for the most part) waiting to realize long term appreciation versus short term gain that inflates the market.
Finally, more often than not the investor from aboard is drawn to the Metro Vancouver area for all the same reasons the local resident are: the natural ocean and mountain setting, the safety and comfort, the stable government and economy. It’s not just about a return or fiscal appreciation. It’s about appreciation of life and enjoyment of use.
For more information on the topic of foreign investment, check out this recent article put out by South China Morning Post.