pointed out time and time
again, foreign - mainly Chinese - buyers seeking to park their
ill-gotten gains beyond the reach of the Communist Party have - in
addition to global capitals like New York City and London - favored a
handful of cities in the Pacific Northwest, as well as Australia and
New Zealand. Many
of these cities - for example, Vancouver - have seen property values
rise to levels that are unaffordable for local buyers.
the influx of capital helped fuel an economic recovery in the
aftermath of the crisis, home values soon reached crisis levels that
demanded action by local officials. Some places have tried to use
taxes to deter foreign buyers. In some instances, the taxes worked -
at least temporarily.
with the flow of buyers refusing to slow despite efforts by the
Chinese government to stop money moving offshore, many of these
cities are getting desperate. And after
years of occasional headlines, it appears the crisis has finally
become dire enough for the mainstream press to start paying attention.
wit, government officials in Canada and Australia who spoke with the Wall
Street Journal for a story about how Chinese
homebuyers expressed concern that widespread foreign ownership has
created bubbles in local real-estate markets. Even as Australia and
New Zealand and some Canadian cities have raised taxes on foreign
buyers, many are worried that home values will continue to climb,
foiling policy makers best efforts to control them. Since it passed an
8% foreign buyers tax last summer, Sydney says foreign buying hasn't
Ellis, chief executive of Investorist, an online portal for
cross-border property transactions, said Chinese property buyers are
an "unstoppable juggernaut". In some
markets with large Mandarin-speaking populations, locals can spot
real-estate ads in Mandarin at bus stations and benches in the
surrounding area. In response, Vancouver imposed a 15% foreign buyers
tax back in 2016. When that didn't work, city officials worked with
the province on something more aggressive.
Province of British Columbia has also passed laws to discourage the
resale of unfinished condo units.
the first Vancouver 15% tax failed to put a lid on foreign buyers,
Mr. Robertson worked with the province of British Columbia on more
aggressive steps. In February, province officials raised the
foreign-buyers tax to 20% and expanded coverage well beyond
Vancouver. Officials also imposed a new levy - 0.5% of the property
value and climbing to 2% next year - on homeowners who don’t pay
income tax in Canada.
April, British Columbia also announced measures to deter the resale
of condo units before construction was completed, to discourage
investors from flipping units before they are occupied.
the Beijing expo, Florence Chan said she originally wanted to buy a
home in Vancouver but changed her mind. "The
taxes are too high," she said, adding
that Melbourne is looking better.
complain that fending off foreign homebuyers is like squeezing a
balloon: No matter where you press, the air moves elsewhere. After New
Zealand passed a ban on foreign speculators buying homes (a measure
the IMF blasted as "discriminatory")
last year, buyers moved back to Canada. And investors are already
looking to Malaysia and Thailand as the next markets ripe for foreign
capital is now returning to Canada, driving the latest surge in home
prices. Buyers from China and the U.S. have found Victoria, the
small capital of British Columbia that sits on an island west of
was declared the world’s hottest new housing market last year in
Christie’s International Real Estate survey, based
on a 29% increase in annual sales of million-dollar-plus homes.
Single-family homes in the Victoria area hit a record high of about
$570,000 in May, up 9% from a year earlier, according to the
Victoria Real Estate Board.
is experiencing the same rapid growth in housing prices and sales
volumes that have strengthened Toronto and Vancouver in recent
years," Christie’s International said
in its survey last month. “If Toronto and Vancouver can be a
measure, it is likely Victoria will continue to perform well despite
[new] regulations” targeting foreign buyers.
has already turned to Malaysia and Thailand, which now tops the list
for Chinese buyer inquiries, ahead of the U.S. and Australia,
according to Juwai.com. Two years ago, Thailand ranked sixth.
Australia, Chinese buyers are believed to be responsible for between
10% and 15% of homes under construction. Chinese
buyers prefer newer homes, and will demolish old homes to rebuild from
scratch. The share is highest in Melbourne and Sydney, where foreign
buyers account for a quarter of newly built apartments. At one swanky
new development in Melbourne, Chinese buyers are said to be behind 10%
of the sales.
Chinese citizens are only allowed to move $50,000 worth of yuan
offshore every year, but there are many loopholes, including buying
expensive watches and exchanging them for cash offshore, or exercising
exceptions for having a child studying at college or living abroad.
But unless the Chinese government strengthens its crackdown on money
moving offshore and disappearing into foreign towers, it's difficult
to imagine how local governments will stop foreign buyers - after all,
taxes also make the problem worse for locals. Over the next decade,
some analysts predict Chinese investors could spend as much as $1.5