South Forest Hill Residences floor plans.House prices in Canada are rising. It is true that Canadian house prices have risen by leaps and bounds in the past two years, but experts have been discussing why on earth they have risen so fast.Please Visit: South Forest Hill Residences floor plans to Get Your VVIP Registration Today!
The proportion is less than 1%, which can not make waves at all; local buyers with rigid demand? I have never heard that rigid demand buyers can drive house prices to take off. So, is it a “pot” for local investors?
Globalnews reported that some recent reports have shown that local investors have indeed contributed to the rise in house prices in the past two years, and the influence may be greater than people think.
It was Paul Beaudry, deputy governor of the Bank of Canada, who said this. In a speech to the Ontario Securities Commission two weeks ago, Paul pointed the finger at local investors, especially short-term investors.
“how could Canadian house prices rise by more than 20 per cent a year without a sudden influx of investors?” “A large proportion of local buyers, who claim to buy their own homes, are actually used for short-term investments,” Paul said.
Because of the ultra-low interest rates and the rapid rise in house prices, some investors think that they can make huge profits in the short term, so they have entered the market one after another. For example, buy an old house with 2 million, then spend 200000 to decorate it, sell it for 2.6 million after a year, and make a net profit of 400000, without having to pay VAT.
Even if every home buyer is honest, for example, those who live in their own homes are self-occupied and those who invest are investments, through this chart counted by the central bank, it is possible to see how active investors will be in 2020 and 2021.
For first-time home buyers, total loans rose by less than 50% in 2021 compared with 2020, and for second-time home buyers, total loans rose by about 70%; investors had the largest increase in loans, almost 100%.
Romana King, content director of the Vancouver Zolo real estate website, also admitted: “at least what I know is that investors buy more homes than first-time buyers, and loans don’t lie.”
People always exaggerate overseas investors, but often ignore local investors, especially local short-term investors. Between 2014 and 2016, a large number of local investors chose short-term real estate speculation.
Romana King said: “Local investors believe that real estate is the least risky investment project, much smaller than investing in stocks, and it is almost unbreakable, so they enjoy it.”
A phenomenon has been revealed in the previous chart: repeat buyers have applied for more loans than first-time buyers compared with the same period last year. In the view of some financial experts, people who already own a house to buy a house again is also a kind of investment.
Because Canada only recognizes one home, the other is often used for investment or as a vacation home, which is the same as buying an apartment for investment without a house.
The surge in regional real estate prices caused by investment in holiday homes is reflected in Okanagan Valley in the interior of BC, especially Kelowna in Kirona, the largest city: the median price of homes sold has exceeded 1 million, as buyers from Dawen, including Alberta, are particularly favored to buy holiday homes in this beautiful land.
A previous column has given such a view: it is much more difficult for people who already own a house to buy a second home than those who do not have a house to buy a first one. Because people who already own a house can get a very large amount of loans with mortgage loans, and there is almost no difficulty in approval.
Just like money rolling money, people who own houses can do “rolling houses”. If the loan for the first home is small and the value is high, they can even “change” the third, fourth and fifth homes. When many people do this, it will undoubtedly exacerbate the supply problem and cause house prices to rise.
Therefore, the impact of pure investors on real estate may not be much greater than the buyers of second and third homes, and the “victims” will only be buyers with rigid demand for the first time. Will this phenomenon ease in 2022? Let’s see where the bank lending rate will go.
A recent analysis by Teranet shows how active people who already own homes are in 2021: in the first eight months of 2021, 25 per cent of all home ownership changes in Ontario accounted for one or more homes.
In 2011, the proportion was only 16%. This data alone tells the story: in 2021, people who already own a house are more willing to buy property again because it is too tempting.