Vancouver burbs “hollow out” as Chinese land bank homes

Via Bloomie:

Vancouver’s multimillion-dollar homes are increasingly out of reach for Vancouverites. And nothing speaks to the Canadian city’s affordability crisis more than its empty houses.

Vacant or temporarily occupied dwellings have more than doubled since 2001 to 66,719 last year as neighborhoods are hollowing out, said Andy Yan, director of Simon Fraser University’s City Program, who analyzed census data for Metro Vancouver released Wednesday. Observers worry the trend will undermine Canada’s fastest-growingregional economy.

Public scrutiny has focused on landlords, particularly from abroad, who park their cash in investment properties where windows remain dark throughout the year. Vancouver introduced a new tax on empty homes last month aimed at boosting the supply of rentals in a city facing a near-zero vacancy rate. The province also imposed a 15 percent tax on foreign buyers last August after discovering more than C$1 billion ($761 million) of global cash had flowed into local properties over a five-week period.

Having just returned from Vancouver I can say that my experience in talking to locals was that if you scratch the surface of the Canada’s normally Teflon Presbyterianism, the anger about this is white hot.

You cannot tax these empty homes highly enough.

David Llewellyn-Smith
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Comments

      • Is it? Have you got data on exactly how many homes have been bought by foreigners or via local proxies with Chinese money?

      • “Is it? Have you got data on exactly how many homes have been bought by foreigners or via local proxies with Chinese money?
        We can’t even get reliable unemployment figures so we would have no chance on that data ……..

      • They could be right HnH. What evidence is there to say they are wrong? The amount of cash out of China is staggering.

      • It’s a factor in virtually every sale on Sydney’s north shore. And the north shore is a massive area.

        The auction winner is often a foreign buyer, and even if they don’t win, the price is pushed up 20% in the bidding process.

      • Link you posted was wrong – this is it:

        https://www.bloomberg.com/news/articles/2017-02-10/vancouver-s-empty-mansions-highlight-middle-class-housing-woes

        “The number of residents on Vancouver’s west side — long favored by families and an easy commute to downtown — has fallen 3 percent since 2001, in contrast to 5 percent growth in population across the whole city, Yan said”

        So population growth has been negligible over 16 years, and supply is increasing as condos built at record rate, yet massive price rises continue. Yes that makes sense.

      • The Ryde/Hills are of Sydney are feeling very Van right now.
        Empty houses or family homes raised so the blocks can be land banked.
        And given we are second to the states as far as a destination for the “great wall of money” it fits.

      • @Gral – finally some common sense from someone. Well done. You only need to spend 30 seconds working out how the market price is set in australia. “what can I get for my property” owner says to agent. Agent replies “a place around the corner with the same amount of bedrooms as you sold for $XXXX” [Chinese illegal foreign buy at 20% premium to previously observed level]. Vendor to agent “get me that same price or more”.
        And people wonder about the effect of illegal foreign buying? The marginal transaction (illegal funds) sets the market price/level, always!!!

        Edit: you only need one illegal purchase at a premium for that new level to be the expected price increase for an entire suburb

      • @ Travis, even if the foreign buyers are only purchasing in specific areas it has a knock on effect as outbid locals are forced into “cheaper” areas and consequently bid them up. Throw the local negatively geared investors into the mix and we end up with the hot mess that is the Sydney and Melbourne housing market.

      • Toronto has a boatload of unoccupied homes

        http://www.businessinsider.com/toronto-has-more-than-99000-unoccupied-homes-2017-2?IR=T

        “The most popular reason however, is likely plain ole’ speculation. One of the consequences of living in a city with a red hot real estate market is flippers will hang on to inventory until they believe they’ve hit peak. In fact, a few months ago we observed that 1 in 3 homes in the city were being sold as never been lived in, despite many having been built a few years ago.”

      • proofreadersMEMBER

        5 bedroom, 4 bathroom, 3 car garage, pool and tennis court property near me bought for $4.3m by Chinese in late 2015 and empty ever since. Also, at least another 4 properties within a few streets of me bought by foreigners in the last 12 months and bulldozed for McMansions. What hope I there?

      • greaterfool.ca has been covering the Vancouver market for years. He has made his case excellently. The problem in Canada is the same in Australia- cheap debt. Locals are bidding against locals. Blaming foreigners overlooks how many markets are overheated despite no foreigners being present in those locations (attending or via proxy).

  1. I have been attending every open house in my area (north east mel) just to get a better understanding of the market. At the lower end of the price spectrum, you have the run down/cheaply constructed modest homes, on a tiny block often next to a busy road. These opens, attract large throngs of people, mostly families of various ethnicities but dominated by anglo/europeans. As you go up in price the demographics change rapidly, the number of older (boomer) caucasion and asian couples increase and families decrease. As you get up to the upper echelons, the numbers dwindle down considerably, and the demographic is almost exclusively Chinese, two or three family groups discussing fervently amongst themsleves in mandarin at each end of the house. Housing will become affordable when immigration is reduced and China finally stops outflows, even high unemployment won’t stop it.

      • supposedly we already have all these factors at play via the ATO hit squad. Why don’t you give Kelly O’Dwyer a nudge for an update of their efforts

      • I have emailed her and you know the result. I have spoken to people in the Liberal Party and get positive sounds and nodding heads. Nothing happens. You have inspired me to try again.

      • @fitzroy – I emailed her again last week. Got generic email back acknowledging my email receipt. I did this once before to Scott Morrison instead and actually got a relatively detailed response from someone in treasury. Perhaps Scott should be the person we follow up? One upside of that is that it will expose the uselessness of Kelly.

    • I feel like I’m in a dystopic world where in told by ‘the party’ that everything is fine, while simultaneously watching my future dissolve in front of me

      • Shelve the red pill. Grind up and snort the blue pill. Slam a shot of tequila and strap yourselves in for the bizzaro thrill ride.

      • Lol that’s hilarious!

        I would do that, problem is that there’s no room left because I’m already being ‘shelved’ by the govts support for specufestors.

  2. scootytootyMEMBER

    Anyone seen the Vancouver Vanishes facebook page? they document houses in the area, photos, when they were built and who built them and their current status, almost every house gets demolished, very sad.

  3. How any government can stand by and watch foreign agents bid up their residents’ property and then effectively remove theses properties from the market at such a scale is absolutely obscene. This has to be one of the worst violations of public service I have ever seen, and I’m not just talking about Vancouver. Kudos to them for doing something, but a 15% up front tax is not nearly enough. Impose a 10% per annum land tax on all property held by people who are neither citizens nor permanent residents OR strictly limit their investments to new builds only and f**king enforce it. And by ‘new build’ I don’t mean replacing an existing single family home with a new McMansion.

    • How any government can stand by and watch foreign agents bid up their residents’ property and then effectively remove theses properties from the market at such a scale is absolutely obscene. This has to be one of the worst violations of public service I have ever seen

      Agree with you 100%.

      But then comes the question of why many ordinary people still vote for the politicians responsible for the disaster. Without the support of ordinary people firstly voting for him and then later manning his trains and camps and gas factories Adolf Hitler would not have been able to commit the holocaust all by himself.

    • The few in my generation (I’m 40) who didn’t buy are fucking decimated, we’re fucked by this, /let alone those below us/. Decimated, ruined by governments who couldn’t give a fuck about us, quite literally they do not care.

      Why there’s not riots yet, I don’t know. I tell you one thing, I’m angry, very fucking angry.

      • Even StevenMEMBER

        I hear you, Esss. Life in Australia has turned into a lotto draw. Concepts of equity – work hard and you’ll do well – have been utterly shredded by the current political system. I do own my house, but I feel angry for everyone who wasn’t as lucky as I. And it was luck… because the smart money was actually on staying OUT of this woefully overpriced housing market.

      • Totally correct ES. What ever you do don’t work hard and pay tax. Just buy a house and you pay less tax and don’t have to work.
        End of story.

        Total BS.
        That is what happens when the country is run by the best governments money can buy.

      • Yep hear you too Esss. People in their 40s who did not buy yet have been massively ripped off. Many underestimated the amount of corruption this country would tolerate when attempting to estimate the future direction of the housing market. I know I did. If there was no corruption my decision not to buy would seem a lot different now. But I was mistaken, I gullibly believed we had the rule of law in Australia and the market would work purely on economics, not on illegal activity on a massive scale. Nothing could be further from the truth. As I understand it and I could be wrong, the year after the GFC, Kevin Rudd relaxed rules for foreign investment in Australian real estate. That was the turning point.

      • I hear all of you

        I’m in my mid 30s, there is a great divide between one half of my friends and the other half.

        One half bought in their 20s, all of us bought by 2006, the others didn’t. They now can’t afford to as a crap home in a crap suburb in Endeavour Hills is now 600,000!

        The thing I hate most is when someone says you were smart for buying early, It isn’t intelligence, it was lucky, nobody foresaw what was about to happen.. when buying we were all worried it would go the other way.

        Now I look at the next generation coming through and think what chance do these kids have without a massive handout from their parents.. next to zero

      • @OMG,

        I hear you on the luck thing. How’s this: I’ve worked around the globe, reskilling and resettling in order to maximise my earnings, in order to save a million dollars (yes, save) at approx 2011. At that time, due to circumstances I returned to Aus. One of my coworkers had a similar net worth to me due to the fact that he bought a house in eastern suburbs of Sydney at a time when it was affordable – one of those “settle down and live happily ever after once married moves”. A few coworkers noted the similarities in our net worth, but drastically different paths arriving their. They’re conclusion: I got lucky? Yes, me, the one who uprooted themselves several times to get ahead. The other guy was the smart one apparently. Now when you look at this in terms of effort, he was far luckier than I and only smarter in hindsight terms.

        I have since bought and sold in Melbourne to add to the tally, but I am completely and utterly lost as to what to do with the money now. I’m stuck like a deer in headlights with a frieght train of wealth destruction barrelling towards me. I’m quite risk averse when it comes to money (obviously, I am not risk averse in terms of making life changing decisions). I think it’s time for me to head back overseas…

      • I got20plus years on you esss, and I vouch personally for the dumb luck thing.
        so glad I am out of it

        I mean get this… my first dwelling was regional was coastal and cost 1 [ ONE ] years income….mid 80’s

      • I too feel your pain. I’ve posted this one here on another post a few weeks ago. https://www.youtube.com/watch?v=KmkvZ69e0nY

        It effectively explains how the Property Council of Australia pull the strings and lobby all sides of government for their evil plan of destroying our quality of life and housing affordability. I blame this whole f**king mess on these c**ts – no doubt they would have lobbied (and continue to lobby) the Feds to keep the immigration floodgates open all of this time. The more people that realise this, the more uproar there will be. Pass it on…

        Also this 30min doco on them from the same poster that exposes more links to the PCA: https://www.youtube.com/watch?v=aV6LNfBNznE

      • “The few in my generation (I’m 40) who didn’t buy are fucking decimated, we’re fucked by this, /let alone those below us/. Decimated, ruined by governments who couldn’t give a fuck about us, quite literally they do not care.”

        QUOTED FOR TRUTH!

    • Spot on Switters.
      How the government of BC (Vancouver) could have allowed high levels of largely unregulated foreign speculation in it’s housing market is astonishing. Land in Vancouver has been expensive for a long time. Like Hong Kong and a few others it had limited supply of cheap land at it’s periphery due to constraints of it’s terrain (water, mountains etc.). When you remove the option of converting cheap farming land to cheap land for housing, either by topography or government decree…land price inflation is the inevitable result. There are no exceptions. Adding further speculative demand to a location where cheap land no longer exists, was always going to end in tears. The same is happening today in Sydney and Melbourne. The difference here is that plenty of super affordable land still exists at the urban edge of Melb/Syd and every town and city in Australia – you’re just not allowed to build homes on it.

    • How can they stand by? easy, the only question they ask is, am I or one of my 1%er friends benefiting and if the answer is yes then all is ok in their world. They care about the rest of us like we care about whether a fly prefers donkey shit to horse shit. We dont. They dont.

    • Switters, you ask, “How any government can stand by and watch foreign agents bid up their residents’ property?”
      They’re not just standing by – they are actively participating and profiting in the housing bubble caused, in part by foreign buying. Seriously, the government does not care if a relatively small sector of the voters cannot afford to buy, because a far greater percentage do own property and are benefiting greatly by massively increasing prices.

      Do not expect anything to change until the “have-nots” outnumber the “haves”, and their complaints are too loud to ignore. As we have seen, the govt acknowledges a housing affordability problem for some, but on the other hand, there is absolutely not a chance they will do anything that will lower prices, therefore the amount of foreign investment will continue to go unabated.

      Maybe One Nation might be able to influence policy if they get in next time – they might be our only hope, but the two majors will not do a thing, and if it ain’t broke, why fix it? And it ain’t broke; the bubble is growing very nicely just the way things are.

  4. I’ve watched this scam repeatedly throughout my somewhat-leafy burb over and over. House gets bought, is knocked down, rebuilt and remains conspicuously empty.

    Who needs restaurants and massage parlours when money laundering is this easy, in a market that is supported to the hilt by the government.

  5. This is exactly what is happening in Auckland too. A civil engineer friend has been monitoring this phenomenon. He attends public auctions, notes houses that are bought by Asian buyers. He revisits the property at a later date. Oftentimes the property is empty. Whilst anecdotal, the NZ Government is very reluctant to dig into this data. I absolutely agree with punitive taxes on long term empty dwellings or land banks that are not progressing through the development process.

    • Same thing in Inner West Sydney, lots of older homes bulldozed for a McMansion where a couple of Chinese move in driving the latest Mercedes / SUV thing. But it’s all legit funds. 😛

      • I noticed this in Canberra too, in my mother’s old suburb of Campbell. A Chinese couple bought an old house opposite her house, and their University aged children moved in. Then house pulled down and replaced by huge modern glass and stone out of character McMansion that dwarfs the other style of houses nearby!

    • They couldn’t give less flying fucks than Keith Richards.. I’ve reported a few, nothing seems to have happened.

      • Can you identify at what point in the process an unapproved foreign national is prevented from registering the transfer of title of an existing dwelling into their own name?

      • re : Pat. The point is where the lawyer/conveyancer refuse to do something illegal, since they must show prove that the buyer is an Australian citizen or PR now. Getting FIRB approval involves filling in a form.

    • Well I need to give a lot of you here a reality check. While there are high level illegal purchases, most of the purchases are done by students with PR handed out to them by our glorious education export sector so technically it is not illegal at all.

      I doubt Australia has an obligation to enforce capital controls of a foreign country.

      Basically, if you are an Aussie, yes you are f.cked but relying on Aussie institution for a cure is not going to work. You need to make Chinese NOT come to Melb/Sydney…. some how…. and also for the banking system not to collapse at the same time. Basically an impossible task.

      • “most of the purchases are done by students with PR handed out to them by our glorious education export sector so technically it is not illegal at all.”
        Can you link to the data source for this?

  6. Its not just chinese/asian, seemingly lots of US and english who pass under the radar. I have been told this so dont have a reference. Whatever, I want a 20% tax on non-aus residents purchases and the Anti money laundering bill by Property put up.

  7. Its not a flaw in the system its a feature.

    ON membership is coming up on my radar, I am almost out of excuses not to join.

  8. With all these empty homes coming into existence it must be a golden opportunity for squatters to occupy in all the cities being mentioned, but if it is happening there is no publicity.

  9. All this is housing affordability talk bullsh%t. If you ban property to foreigners and give them an ultimatum of 48h to sell, I guarantee you houses will be affordable in 48h… Foreigners are banned in many countries like Thailand, Baltic countries etc…

    • Well China does not allow foreign buyer to purchase anything, let alone houses in China, heck they don’t even let Chinese citizens purchase houses! lol.

      Problem is Australia is addicted on Chinese money, the whole economy is humming on it. We are going to get one hell of a cold turkey once this party ends.

      • You can buy houses in China, but not the land it sits on, which is on a 99 year lease.

        Foreigners are allowed to buy houses in China now, however working out your capital gain tax is very complicated if you ever try to sell it.

  10. On Sydney’s upper north shore the chinese swarm the sales of new mcmansions and existing houses like a plague of locusts.
    The house next to the one i rent sat empty for 7 months. Must worth close to $3m. Chinese have finally moved in.