Metro Vancouver sees $885 M in foreign investment in five weeks

The provincial government has released data on the foreign investment in the province and estimates that in just five weeks, $885 million flowed into the Metro Vancouver real estate market.

This foreign investment represents 86 per cent of the capital invested in the sector by foreign purchasers throughout the province. The province announced on Monday that beginning Aug. 2, 2016, and additional property transfer tax rate of 15 per cent will apply in Metro Vancouver to purchasers of residential real estate who are foreign nationals. This will also apply to foreign controlled corporations purchasing property in the area.

As part of the government’s 2016 budget, data was collected to identify foreign purchasers and better understand to what extent foreign capital is having on residential real estate prices.

Data collection began June 10, 2016. From June 10 through to July 14, data for all of B.C. show:

19,383 residential property transactions in British Columbia

1,276 transactions involved foreign nationals

This shows a rate of 6.6 per cent of transactions involved foreign nationals

The total investment by foreign nationals was $1,024,031,118 representing 7.9 per cent of the total investment

Data specific to Metro Vancouver show:

Metro Vancouver accounted for 49.7 per cent of the real estate transactions in B.C., and 73.3 per cent of transactions by foreign buyers

By value, Metro Vancouver accounted for a total $8.8 billion worth of transactions; foreign purchasers accounted for $885,393,373.

“The average investment by Canadian citizen or permanent resident buyers in Metro Vancouver was $911,425, while the average investment by foreign buyers was $946,945. While foreign investment in residential real estate markets is only one factor driving price increases in Metro Vancouver, it represents an additional source of pressure on a housing market struggling to build enough new homes to meet demand. The Province's additional tax on foreign purchases will help manage foreign demand while new homes are built to meet local needs,” said the province in a statement.

Foreign investment has arguably been the main factor driving up prices in Metro Vancouver. The provincial government says this investment puts additional pressure on the housing market and not only make it unaffordable, it creates difficulty to keep up with demand.