Today, Finance Minister Mike de Jong released nineteen days worth of real estate transaction data. In it, there were a total of 5,118 transactions. 260 (5.08%) of these properties were purchased by foreign nationals.
Now, five percent might not sound like a lot, but consider this. When a resident buys a property, they will almost always sell another or vacate a rental — leaving total housing supply unchanged. When a foreign buyer acquires a property, they probably don’t. In light of the huge surge in Chinese capital flight recently, it’s safe to say most Chinese purchasers are buying properties without selling another.
That indeed seems to be the case, as pointed out in my last post.
Further, if those foreign buyers leave those homes empty, or only use them as vacation properties, available housing supply shrinks.
It’s impossible to say how many of those homes will remain unoccupied, but even if we assume that only half of them are, housing supply effectively decreased by 130 over those 19 days in June. At that rate, available housing supply could decline 2,500 over the course of the entire year.
When you consider housing starts for the Vancouver metro area have been averaging 20,000 the last few years, if 2,500 homes are effectively removed from total supply, this is equivalent to a 12.5% drop in housing starts. That’s very significant.