Residential property sales to foreign nationals in Richmond showed a slight uptick in Richmond in September, despite a 15 per cent tax on such transactions being applied on Aug. 1.
The increase may correlate to renewed interest in the Vancouver real estate market, according to Sotheby’s International Realty.
Meanwhile, overall, home listings and sales in the city are down and prices have settled into a “holding pattern” as a result of a series of recent government interventions, such as the foreign buyers’ tax, according to the Real Estate Board of Greater Vancouver.
“Potential buyers and sellers are taking a wait-and-see approach to try and better understand what these changes mean for them,” said REBGV president Dan Morrison Tuesday, after releasing real estate transaction data for October.
He said the detached-home market has seen the largest reduction in home buyer demand across the region.
In Richmond, the benchmark price of an average residential property did not change in October and stands at $875,000. Detached home prices went down 0.7 per cent to sit at $1.67 million, while apartment prices rose by two per cent. Last October, there were 194 detached home sales, whereas this year, there were only 61. Meanwhile, apartment sales remained steady. Across the region, overall sales were 15 per cent below the 10-year October sales average.
Data indicates, however, that prices are not expected to fall anytime soon, as there are still enough sales relative to the number of listings to maintain a seller’s market.
Over the past three years, detached home prices in Richmond have risen 80.3 per cent, which is more than any other municipality in the region, according to REBGV.
After much speculation about the impact Chinese money was having on the real estate market, recently collected data by the province’s Ministry of Finance showed between June 10 and Aug. 1 about 25 per cent of all properties in Richmond were being purchased by foreigners (initial data showed Chinese nationals accounted for 90 per cent of “foreign nationals”).
After the tax was implemented, the rate of such purchases plummeted to 1.9 per cent in Richmond in August. But that figure has since sprouted to 4.4 per cent in September.
Notably, across Metro Vancouver, foreigners are now, on average, investing less in each transaction. For instance, in Richmond, prior to the tax, foreign money accounted for 96 per cent of all transactions involving foreigners. Since the tax, foreign money accounted for 59 per cent of all transactions involving foreigners. In other words, foreign money accounts for a smaller share of what may be a joint purchase.
The Ministry said it has collected $10.1 million from the special levy for Metro Vancouver homes. It mentioned in a news release that it is auditing 85 transactions to determine if additional taxes should have been paid.
Although the tax has shown to put an initial freeze on direct foreign investment in Richmond, a new partnership between Sotheby’s International Realty and Juwai.com, a China-based international real estate listings service, indicates interest by Chinese investors in Vancouver may be on the rebound.
“While Juwai.com’s August 2016 data illustrated an initial shift in interest in Canadian real estate following the implementation of a 15 per cent property transfer tax on foreign buyers of Metro Vancouver real estate, September 2016 data reflected month-over-month gains across Canada’s four largest markets, with buying inquiries up 200 per cent in Vancouver,” stated a Sotheby’s news release that highlighted how the two companies will be working together to match Chinese buyers with luxury properties in Canada.
“The reality is that global exposure is now paramount for Canadian real estate: it is what attracts the most qualified buyers, and the highest price for our clients’ homes. China is an important market for us,” said Sotheby’s president and CEO Brad Henderson.